Plus: Rent freeze setback, AI misalignment, Bolshevik ridiculousness, and more…
Hike: Yesterday, the Federal Reserve lifted its benchmark rates for the first time in three years, in contrast to the president’s claim that inflation is under control and not a real concern.
The move sets the target range for the federal funds rate at 3.75% to 4.0%, and the decision was reached unanimously.
This development is especially notable because the newly appointed Federal Reserve chair, Kevin Warsh, was chosen to succeed Jerome Powell, who had drawn the president’s ire.
The Reason Roundup Newsletter by Liz Wolfe Liz and The Reason team help readers parse the day’s news every morning.
The rate increase disrupted the White House’s narrative about the man selected by President Trump for the post in January, The Wall Street Journal notes. Trump and his allies had framed the push for higher rates as coming from a committee hostile to Warsh, who last year suggested he would have cut rates earlier than the Fed ultimately did.
“I’m relying on Kevin, but he’s got, you know, a very tough board, a board that was put there by other people,” said President Donald Trump. “And I told him, I spoke to Kevin, and I said, ‘You might as well vote with the board. It’s not going to matter.’”
“The board is very hostile,” he added. “They’re very political. They’re doing the wrong thing.”
“They’re raising the rates to make Trump do as badly as they can possibly do,” he continued, referring to himself in the third person. (Rates “should be 1%, or less, because we are the Best Credit in the World—BY FAR,” he added on Truth Social.)
This is probably not what they’re doing; Trump has remained in denial about how severe inflation actually is, and if one were to guess, the board believes it can curb inflation without triggering a recession.
Federal Reserve forecasting: The “dot plot,” which is compiled quarterly to show officials’ expectations for future borrowing costs, “revealed that 16 of the 18 policymakers who submitted projections expect at least one more quarter-point move by year’s end,” The New York Times notes. “That would push rates to a range of 4% to 4.25%. Most want rates to stay at or above that level throughout 2027. They also raised their estimates for rates in 2028 and beyond compared to three months earlier.”
Warsh did not add his own projections “in keeping with his opposition to the dot plot as a communications tool” but did publicly signal that further rate hikes seem possible, even likely.
Scenes from New York: A Manhattan judge overseeing a lawsuit challenging Mayor Zohran Mamdani’s rent-freeze on rent-stabilized homes dealt the mayor a setback on Wednesday, ordering his administration to disclose any communications it had with the panel that approved the freeze, The New York Times reports. The order, issued by Brendan T. Lantry of the New York State Supreme Court, marks another twist in landlords’ suit to void the rent freeze. The suit contends the panel ignored landlords’ financial struggles under political pressure from Mamdani as he worked to fulfill a campaign pledge.
Lantry’s order “goes to the heart of our position that this was a sham process with a predetermined outcome,” said one of the landlords’ lawyers, “and communications between the mayor’s office and the Rent Guidelines Board, which everyone agrees should be independent of the mayor’s office, should reveal that.”
QUICK HITS
- “We aim to disclose examples that provide useful evidence about how model misalignment arises, how it manifests, and where safeguards succeed or fail,” OpenAI states in a fresh press release. “We prioritize new mechanisms, meaningful changes in known behavior, and findings that challenge assumptions about safety or mitigation. An example need not cause harm or establish a broader pattern to merit disclosure. This framework will cover qualifying behavior across a model’s lifecycle—including training, evaluation, testing, and deployment.” Incidents it is now disclosing: “During the training of GPT‑5.6 Sol, many model instances added instructions to their summaries to hide mistakes or misaligned behavior from the user”; “while answering a routine earnings question for a California county, a model found and used an exposed API key without authorization. When it still failed to retrieve the requested figures, it fabricated them and presented them as data from the requested source”; and “when a user asked an unreleased model for the IDs and names of lakes larger than 5,000,000 square meters, the agent located the correct answer using Python. But since the instructions required a browser citation, the agent decided to upload the file to cite it in its answer, without asking the user.” This appears to be a pattern of agents acting against programmer intent.
- “Bolsheviks are unsentimental killers; their program is to seize and hold state power through force and terror,” writes Gary Rosen for The Washington Post. “The program of today’s DSA revolutionaries is expressive, romantic and, I would argue, only secondarily political. It is the feckless utopianism and anti-imperialist posturing of the dorm lounge and the Brooklyn brewpub—the politics of young, college-educated, downwardly mobile urbanites looking for a cause to organize their grievances… There is something touching in this starry-eyed vision, and it speaks to genuine anxieties. But it is an ideological fairy tale. It can deliver wasteful political theater such as government-run grocery stores. It might win a hearing for Medicare-for-all, at least until Americans learn about the sacrifices it would entail. It can provide a degree of meaning and social connection to a privileged urban cohort determined, in classic fashion, to shock the bourgeoisie.”
- A two-year-old suffering from cerebral palsy and epilepsy was euthanized in the Netherlands, following a 2024 rule change that allowed children to die by euthanasia along with adults. “Under the broadened Dutch rules, doctors can end the lives of terminally ill children aged one to twelve if they are considered to be suffering unbearably with no prospect of improvement and no reasonable alternative to relieve their suffering,” reports Right to Life News. Other libertarians may differ, but the expansion of euthanasia to children remains a contentious and thorny issue where the sick individual is not the one requesting death.
- Meet some of the new SpaceX millionaires.
