US raises interest rates for first time in three years
The Federal Reserve raised interest rates today for the first time since July 2023 and flagged further increases in borrowing costs in coming months.
The US Federal Reserve raised interest rates for the first time since July 2023, with economists expecting additional increases in the months ahead. Acting Federal Reserve Chair Kevin Warsh endorsed the decision, signaling possible future rate hikes. The move aims to curb inflation, a challenge President Donald Trump struggled to address.
The 0.25 percentage point hike brought the benchmark rate into the 3.75%-4.00% range. Economists projected at least two more rate increases this year, with only two forecasting rates to stay unchanged. Warsh, new to the role, did not provide his own rate forecast. The policy shift marks a departure from Warsh's previous inclination to keep rates low.
The Fed now projects rates to peak between 4.00%-4.25% by year-end and remain steady through 2027. The decision, announced ahead of midterm elections, aims to quell voter concerns over rising gasoline and mortgage costs. Inflation is projected to hover above the 2% target until 2029, with economic growth modestly revised upward to 2.3%. Unemployment is expected to dip to 4.1% by year-end.
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