Fed Hikes Interest Rates for First Time Since July 2023 Amid Inflation Fears

The US Federal Reserve has raised interest rates for the first time since July 2023 to combat persistent inflationary pressures and surging energy costs. The Federal Open Market Committee (FOMC) unanimously decided to hike the benchmark interest rate by a quarter-percentage point, setting the target range between 3.75 percent and 4 percent.

The decision follows last week's consumer price data, which showed the US Consumer Price Index (CPI) rose 0.4 percent month-on-month in August and 3.4 percent year-on-year, remaining above target levels. Energy costs were a particular concern, with the energy index rising 2.1 percent in August and 16.3 percent annually.

The Fed's move comes as policymakers weigh the risks that inflation could become entrenched alongside elevated energy prices driven by geopolitical conflicts. The central bank emphasized its commitment to restoring price stability, citing resilient household spending, robust productivity growth, and strong capital investment.