Fed Raises Rates for First Time in Three Years Amid Energy Shock and AI Investment Boom

The Federal Reserve raised interest rates for the first time in three years, citing an energy shock and surge of AI investment that have reshaped the inflation outlook.

Markets took the policy announcement in stride, with the S&P 500 adding to earlier gains. The robust gain in retail sales added to a string of hot economic data in August, supporting the notion the US economy is strong enough to withstand higher interest rates.

US crude oil inventories fell for a third consecutive week while gasoline and distillate stocks saw increases. This could lead to higher fuel costs spilling over to prices of other goods and services, according to Bank of Canada policymakers.