Fed Hikes Interest Rates by Quarter Point Amid Persistent Inflation
The US Federal Reserve has raised its benchmark interest rate by 25 basis points for the first time since 2023, in response to persistent inflationary pressures and changing economic conditions. The decision was made by the Federal Open Market Committee (FOMC) and approved unanimously with a 12-0 vote.
The target range for the federal funds rate has been increased from 3-3/4 to 4 percent, which is in line with market expectations. According to the FOMC, this move will support a faster return to its 2 percent inflation goal and deliver price stability.
Despite continued uncertainty arising from geopolitical developments, US economic activity remains solid, with domestic spending resilient and productivity growth strong. Job additions have kept pace with workforce growth, and the unemployment rate has shown little change.