Fed Hikes Interest Rates, Markets React

The US Federal Reserve raised interest rates for the first time in over three years, sending shockwaves through financial markets. The decision was unanimous, with new Fed chief Kevin Warsh joining in, and signals a shift towards further tightening of borrowing costs.

The move sparked a sharp rise in the dollar, a slump in the Dow and S&P 500, and a significant flattening of the Treasury bond yield curve. The median outlook of the FOMC suggests higher rates are on the horizon, with markets pricing in over 25 basis points of tightening by year's end.

The impact is already being felt, with diesel prices hitting record highs, up 15% in a month and 70% over the past year. Senate Majority Leader John Thune has even suggested an export ban to help lower prices, highlighting the potential squeeze on households and businesses.