WASHINGTON-The Federal Reserve raised interest rates Wednesday for the first time in three years, a sharp reversal that began taking back cuts it made last year and implicitly undercut the White House's insistence that inflation isn't a concern.

The increase, approved unanimously, will raise the benchmark federal-funds rate range by a quarter point to between 3.75% and 4%. The vast majority of officials penciled in one more hike this year in interest-rate projections released after their meeting.

Chairman Kevin Warsh vowed shortly after taking office in May to end an overshoot of the Fed's 2% target now in its sixth year and followed through with an increase that had been widely anticipated in recent days.

The rate hike scrambled an account the White House had offered of the man tapped by President Trump for the job in January. Trump and his allies had cast pressure to raise rates as coming from a committee hostile to Warsh, who last year said he would have cut rates sooner than the Fed ultimately did.

It also followed a lost year in the Fed's inflation fight. The central bank has made no progress toward its 2% goal since mid-2025, including after cutting rates three times late last year to guard against a labor-market slowdown. Instead, the Iran war has lifted energy prices, and the AI boom has driven an investment surge that has buoyed the economy and markets.

"Today's policy action will support a timelier return to the committee's 2% goal," the rate-setting committee said in its policy statement. It cited elevated uncertainty due in part from geopolitics and omitted previous language that had attributed elevated inflation partly to supply shocks.

Analysts had said that despite intense focus of late on monthly inflation data, the biggest change to the outlook has come from a run-up in energy and commodity prices.

"It's the fact that the war in Iran has re-intensified and the energy price shock is getting bigger again," said William Dudley, the former New York Fed president.