Fed Hikes Interest Rates Amid Rising Inflation Concerns

The Federal Reserve voted unanimously to raise its benchmark federal-funds target range by 25 basis points to 3.75% to 4.00%, citing inflation as the central problem facing policymakers.

Federal Reserve Chairman Kevin Warsh said that despite a strong labor market, 'inflation remained the central problem facing policymakers even as the broader economy continued to demonstrate strength.'

The increase came despite opposition from President Donald Trump, who has advocated substantially lower interest rates. Trump renewed his criticism of Federal Reserve policy and said U.S. interest rates should be 1% or lower.

The bond market was already tightening conditions before the Fed acted, with the benchmark 10-year Treasury yield climbing above 5%. The rise in Treasury yields had already inflicted losses on some existing bondholders while increasing the yields available to investors purchasing newly issued securities.