Fed Hikes Key Rate for First Time in Three Years Amid Inflation Fears

The Federal Reserve has increased its benchmark interest rate for the first time in three years. The move aims to combat stubbornly high inflation, which is affecting Americans' affordability and has become a key issue in the upcoming midterm elections.

The quarter-point increase brings the Fed's key rate to around 3.9%. This could lead to higher borrowing costs for mortgages, auto loans, and credit cards over time.

In its quarterly projections, the Fed signaled that it expects to hike rates a second time later this year to 4.1%.