Federal Reserve Raises Interest Rates for First Time Since July 2023
The Federal Reserve increased its benchmark interest rate by 0.25 percentage points on September 16, marking the first hike since July 2023. The decision came after a unanimous vote from the FOMC and raised the federal funds rate to a target range of 3.75%–4%. Fed Chair Kevin Warsh cited persistent inflation as 'too high for too long' and emphasized that underlying price pressures remain above acceptable levels despite economic resilience. The updated economic projections showed higher median forecasts for both headline PCE (personal consumption expenditures) inflation at 3.7% and core PCE at 3.4%. Officials now expect inflation to return to the 2% target by 2029, with GDP growth projected at 2.3% in 2026. The Fed also indicated that further rate hikes are possible before 2027. Markets reacted negatively immediately after the announcement, with major indices like the Dow Jones Industrial Average dropping over 400 points.
Topics: economic policy Federal Reserve inflation interest rates