Fed Hikes Rate as US Mortgage Rates Reach Nearly 7%

The Federal Reserve has raised its benchmark interest rate for the first time in three years to combat stubbornly high inflation, and signaled another rate hike could occur later this year.

The quarter-point increase lifts the Fed's key rate to about 3.9%, which could result in higher borrowing costs for mortgages, auto loans, and credit cards. The central bank also projects that its rate-setting committee could raise it a second time to 4.1%.

Americans are already struggling with high costs for groceries, gas, and housing, making affordability a leading issue in the upcoming midterm elections, just seven weeks away.