Fed Hikes Rates Amid Ongoing Energy Wars Driving Inflation
The Federal Reserve raised interest rates for the first time since July 2023 in response to sticky inflation caused by ongoing energy wars. The federal funds rate increased from a range of 3.5 percent to 3.75 percent to a range of 3.75 percent to 4 percent.
The central bank cited elevated inflation as the reason for the move, stating that it will support a timelier return to its 2 percent goal and deliver price stability.
President Donald Trump called for lower interest rates on Truth Social, arguing that the US is the best credit in the world and should have rates at or below 1 percent. However, inflation had been approaching the desired target rate of 2 percent before hostilities commenced in Iran, causing a spike to 4.2 percent.
Oil prices rose above $100 a barrel for both WTI and Brent crude oil, while natural gas in Europe jumped to about €79.07/MWh after the war-related global supply disruptions resumed.