US interest rates raised for first time in three years

The United States' Federal Reserve recently increased interest rates for the first time in over three years, aiming to curb soaring prices. The Fed raised rates from 3.5%-3.75% to 3.75%-4%, despite opposition from President Donald Trump, who advocated for lower rates. Fed Chair Kevin Warsh defended the decision, stating that inflation has been too high for too long and emphasized the need for a sober and responsible approach.

Higher interest rates make borrowing more expensive but can lead to better returns on savings. Warsh highlighted that while there was optimism within the Fed leadership, inflation remained a concern, noting that US inflation had been above the 2% target for more than five years. With the upcoming midterm elections and rising gas prices, affordability has become a top voter concern.

The Fed's decision aims to stabilize prices, focusing on the strong jobs market and broader economy. The move is expected to affect mortgage rates, with major US banks raising their prime lending rate to 7%. The Fed plans to potentially raise rates further before cutting them in 2028 and 2029, with inflation projected to fall to the 2% target by 2029.