The Federal Reserve (U.S. central bank) raised interest rates by a quarter point on Wednesday, its first increase in three years, but stocks fell after Chairman Kevin Warsh delivered a hawkish message suggesting further hikes could be needed to contain inflation. The Dow Jones Industrial Average dropped 631 points, or 1.2%. Fed policymakers projected one additional rate increase in 2026 and none in 2027, while Warsh emphasized that the central bank would respond if inflation remained too high. Consumer-price inflation rose from 2.4% in January to a three-year high of 4.2% in May as the Iran war drove oil prices higher, before easing to 3.4% in August. Crude prices have recently exceeded $100 a barrel, contributing to record diesel prices of $6.40 per gallon and gasoline prices of $4.44 per gallon. Warsh said the Fed could not control individual energy or food prices but would prevent higher costs from spreading through the broader economy. His stance strengthened investor confidence in the Fed's willingness to act independently of President Trump's calls for rates of 1% or less.