The Fed Raised Rates. What Comes Next?

After four months of talking tough about inflation, Kevin M.Warsh finally followed through.On Wednesday, the chairman of the Federal Reserve announced with his colleagues that the central bank had raised interest rates by a quarter of a percentage point to a new range of 3.75 percent to 4 percent.The move was widely expected, with financial markets ascribing over 90 percent odds to an increase ahead of the gathering.

The question now is what comes next.Mr.Warsh, in an abridged news conference, sought to keep the Fed’s options open.

He underscored his aversion to providing guidance about what the future path of policy might be and said plainly that he did not want to “prejudge any future decisions we make.”But in parsing through Mr.Warsh’s comments on Wednesday, and a new set of economic projections from officials that accompanied the rate decision, it was clear that the Fed was not done raising rates.The most direct signal came from the updated “dot plot,” which aggregates on a quarterly basis what officials think will happen to borrowing costs over the coming years....