Federal Reserve Hikes Rates for First Time Since 2023

The Federal Reserve has reversed course and raised interest rates for the first time since July 2023. The federal funds rate is now at a target range of 3.75%-4.00%. This move follows strong inflation data, including an August core CPI reading of 0.29% month-over-month, beating expectations.

Chair Kevin Warsh had telegraphed the possibility of a hike in his Jackson Hole speech, stating 'Price stability is not self-executing.' A Reuters poll found that 86 out of 101 economists predicted the 25 basis point hike.

The Fed's preferred inflation metrics remain above the 2% target, and geopolitical tensions have pushed energy prices higher. The outcome was all but certain by the time the FOMC convened this week.