US stocks fall, dollar gains after Fed lifts interest rates
Markets viewed the Fed’s message as more hawkish than expected after most policymakers projected another hike in 2026.
On Wednesday, Wall Street stocks fell while the dollar advanced following the Federal Reserve's decision to raise interest rates for the first time since 2023. The broad-based S&P 500 index declined by 0.5%. The Fed's higher interest rates were expected, but markets deemed the central bank's overall message as more hawkish than anticipated.
This was due to the majority of Fed policymakers indicating at least one more rate hike before the end of 2026. The US central bank raised rates to between 3.75% and 4.00%, citing elevated inflation and stating that the rate hike would support a timely return to its 2% target for the metric. Fed Chair Kevin Warsh emphasized that the decision was serious but necessary, given that inflation had been too high for too long.
However, Warsh's move may spark criticism from President Donald Trump, who has been critical of former Fed chair Jerome Powell and has launched an unprecedented assault on the Fed's independence. Following the Fed's announcement, White House spokesperson Kush Desai expressed disappointment, stating that Trump had been clear about his desire for lower interest rates.
The Fed's decision will be followed by the Bank of England, which is expected to keep its benchmark rate unchanged due to weak UK economic growth and high inflation. The Bank of Japan is also expected to raise rates on Friday due to rising inflation and the need to maintain support for the yen. Investors are also monitoring a planned summit between President Trump and Chinese leader Xi Jinping, hoping for some tariff reductions.
Written by urgent.news from Free Malaysia Today's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
This story
This is one outlet's version. Read the fullest account.
- Fed raises rates in search of 'timelier' drop in inflation, sees more tightening ahead brecorder.com
- US stocks: Wall Street ends lower after Fed hikes interest rates, sees more tightening ahead businesstimes.com.sg
- US stocks fall, dollar gains after Fed lifts interest rates freemalaysiatoday.com
- US stocks fall after Fed hikes key interest rate news.rthk.hk
- Fed raises rates in search of ‘timelier’ drop in inflation, sees more tightening ahead japantimes.co.jp
- Fed hikes rates for first time in over 3 years thehill.com
- Fed raises interest rates, a sign of concern about rising prices: "Inflation is too high" cbsnews.com
- U.S. stocks slip after the Fed raises interest rates, hints more hikes may be on the way pbs.org
