Fed Raises Rates, Signals Possible Further Hike

The Federal Reserve raised its benchmark interest rate by a quarter percentage point to a target range of 3.75% to 4%, its first increase since July 2023 and its first under Chair Kevin Warsh. Officials cited inflation that remains above the Fed’s 2% target, with consumer prices up 3.4% in August, resilient employment and renewed oil-price pressures linked to conflict involving Iran. The move reverses six consecutive rate cuts totaling 1.75 percentage points, and updated projections indicate another increase could occur later this year. The hike is expected to raise borrowing costs for households and businesses, while longer-term Treasury yields and mortgage rates have already climbed. Warsh’s anti-inflation stance puts him at odds with President Donald Trump, who has urged the Fed to keep rates low or cut them, and investors will assess the Fed’s projections and Warsh’s comments for signs of a broader tightening cycle.