U.S. Federal Reserve raises interest rates for 1st time in 3 years
The Federal Reserve said it cut rates to help bring inflation back to the central bank's two per cent target. It's the first policy shift under the new Fed chief, who took office in late May after being selected by Trump with an expectation that he would cut rates. But economists say those pressures aren't hitting Canada in quite the same way, and don't put the same kind of pressure on the Bank…
On Wednesday afternoon in Washington, the Federal Reserve took its first interest rate increase since July 2023, raising the target range for the federal funds rate to between 3.75 and 4 percent. The unanimous decision marked three years of falling American interest rates ending at two o'clock in Washington. The Federal Reserve's decision aimed to support a timelier return to its 2 percent inflation goal, as inflation remained elevated despite a solid pace of economic growth and relatively stable unemployment.
Federal Reserve Chair Kevin Warsh emphasized that inflation had been too high for too long, rejecting the idea that policy had been excessively tight. The median projection for the end of the year now sits at 4.1 percent, suggesting one further increase before December 2026. The shift in expectations implies a long hold on higher rates rather than a quick reversal.
The decision to raise rates was based on the forecasted inflation rate of 3.7 percent for the current year, with the last rate increase occurring in July 2023, when the range peaked at 5.25 to 5.5 percent.
Written by urgent.news from The Rio Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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