US Fed hikes rates for first time since 2023
The US Federal Reserve on Wednesday raised its interest rate by 25 basis points to 3.75-4%, its first hike since July 2023, to combat persistent inflation. The Federal Open Market Committee (FOMC) voted unanimously, 12-0, at a meeting held on September 15-16. “Inflation remains elevated. Today’s policy action will support a timelier return to the […] The post US Fed hikes rates for first time…
On September 15-16, the US Federal Reserve raised its interest rate by 25 basis points to 3.75-4%, marking its first increase since July 2023. The Federal Open Market Committee (FOMC) voted unanimously, 12-0, during a meeting aimed at addressing persistent inflation. Fed Chair Kevin Warsh emphasized that inflation remains elevated and reiterated the Committee's commitment to achieving a 2% inflation goal.
The Fed projected median US GDP growth of 2.3% in 2026, up from June's 2.2% projection, and 2.4% for 2027. Unemployment is forecast at 4.1% for both years, down from June's 4.3%. Inflation, measured by the personal consumption expenditures price index, is now expected to reach 3.7% in 2026, up from the June forecast of 3.6%, while remaining steady at 2.3% for 2027.
Warsh cautioned that inflation is too high and has persisted for too long, warning of the risk of unanchored inflation expectations. He maintained that the Committee's unanimous vote demonstrates their resolve to achieve price stability more swiftly. Warsh downplayed the potential for an aggressive rate-hiking cycle, stating he is not involved in forward guidance.
The unanimous decision has been interpreted as hawkish, indicating a potential for additional rate hikes before year-end. Analysts read the decision as a sign that the Fed is prepared to continue tightening monetary policy in response to ongoing inflationary pressures.
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