Fed Raises Rates in Search of ‘Timelier’ Drop in Inflation, Sees More Tightening Ahead
WASHINGTON, Sept 16 (Reuters) - The Federal Reserve raised interest rates on Wednesday and flagged more hikes in the coming months, with new U.S. central bank chief Kevin Warsh joining a unanimous decision that effectively acknowledges the Trump administration's inability so far to control inflation that policymakers worry could worsen.
The Federal Reserve raised interest rates by a quarter of a percentage point on Wednesday, signaling further increases in the coming months. This move, made by a unanimous Federal Open Market Committee, acknowledges the failure of the Trump administration to control inflation, which could worsen if left unchecked. The new Fed chief, Kevin Warsh, agreed with the decision, stating that it would help achieve the committee's goal of a 2% inflation rate.
The decision was based on stronger economic growth, robust domestic spending, and high capital investment, all of which have contributed to rising price pressures. Warsh emphasized the need for tighter monetary policy, as the economy has shown signs of strengthening. The move comes after three years of inaction and sets the stage for further rate hikes throughout the year, with a target range of 4.00%-4.25% by the end of 2027.
The rate hike also removed a reference to "supply shocks," particularly in the energy sector, indicating that policymakers believe inflation is driven by broader factors. The dollar strengthened following the announcement, and bond yields rose to their highest level in over two years. Analysts predict that the Fed will likely continue to tighten monetary policy, with a high probability of additional rate hikes by year-end.
Written by urgent.news from The Japan News by The Yomiuri Shimbun's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
