Economy

Federal Reserve hikes interest rates for first time since 2023

AI SUMMARY

The Federal Reserve raised its benchmark interest rate by 25 basis points to a range of 3.75% to 4% amid concerns over stubborn inflation.

The Federal Reserve voted 12-0 to raise the benchmark interest rate by 25 basis points, bringing the federal funds rate to a range of 3.75% to 4%.
This marks the first interest rate hike by the central bank since July 2023.
The Federal Open Market Committee noted that economic activity is expanding at a solid pace and domestic spending remains resilient.
Fed Chair Kevin Warsh stated that inflation has been running above target for more than 5 years and remains the predominant focus.
The personal consumption expenditures index was estimated at around 3.6% in August, remaining well above the 2% target.
The median projection from policymakers indicates one more 25-basis-point rate hike is expected later this year.
The next FOMC interest rate meetings are scheduled for October 27-28 and December 8-9.
Following the announcement, the S&P 500 dropped 0.5% and the Dow Jones Industrial Average fell 1.3% in late afternoon trading.