Fed Hikes Rates Amid Elevated Inflation, Stocks Fall

The Federal Reserve raised interest rates by 25 basis points to a target range of 3.75% to 4%, despite US stocks falling after the decision.

The Federal Open Market Committee approved the rate hike unanimously in a 12-0 vote, with policymakers signaling that another increase could follow.

The Fed said economic activity was expanding at a solid pace, with resilient domestic spending and strong productivity growth.

However, inflation remains elevated, with the central bank raising its near-term forecasts. The Fed expects inflation to return to its 2% target in 2029, with headline PCE inflation projected at 2.3% and core PCE inflation at 2.5% in 2027.