Fed Hikes Rates Amid Elevated Inflation and Rising Interest Costs
The US Federal Reserve raised interest rates by 0.25% to a range of 3.75-4% on September 16, in an effort to combat persistent inflation.
According to Federal Reserve Chairman Kevin Warsh, 'inflation remains elevated' and the rate hike will support a 'timelier return to the committee's 2% goal'. Warsh added that he would be hard pressed to describe broad financial conditions as restrictive, leading to the removal of a dose of accommodation.
The decision was unanimous, with new US central bank chief Kevin Warsh joining in. The move marks a shift from the previous administration's promise to lower prices on his watch.
The rate increase was widely expected, but investors will be looking for further information from the Fed chief about what might prompt additional increases in borrowing costs. Market bets on a rate hike at the Fed's next meeting in late October ticked higher to 56.5% from 54% prior to the hike.