Fed raises rates in search of ‘timelier’ drop in inflation, sees more tightening ahead
The rate increase was the first such move in three years and the first policy shift under the new Fed chief.
The Federal Reserve increased interest rates on Wednesday and signaled additional hikes in the months ahead, according to a unanimous decision led by newly appointed Federal Reserve Chair Kevin Warsh. The move acknowledges the Trump administration's struggles to curb inflation, which could potentially worsen. Despite President Trump's promise to reduce prices during his tenure, factors such as global import tariffs, energy disruptions following the U.S.-Israeli conflict with Iran, and capital investments spurred by the artificial intelligence surge have maintained persistent price pressures.
Consequently, the Federal Reserve raised its benchmark overnight interest rate by 0.25 percentage points, bringing it into the range of 3.75%-4.00%. Out of 18 policymakers, 16 projected at least one more quarter-point hike by year-end, with only two believing rates would remain steady. All but one agreed that there were still upside risks to inflation, no longer attributing them primarily to temporary supply disruptions.
Written by urgent.news from Japan Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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