Fed Hikes Rates Amid Geopolitical Uncertainty

The US Federal Reserve has increased its base interest rate by 0.25 percentage points to 4 percent, marking the first such decision since 2023.

Fed chair Kevin Warsh pointed to the 'geopolitical landscape of shocks and uncertainty' as one reason for inflation, without directly mentioning the war on Iran.

Warsh acknowledged that individual prices, like oil or foodstuffs, would not be affected by the decision, but said it was aimed at preventing changes in relative prices from having broader effects on the economy.

The Fed's move is a response to financial markets' demands for an increase, with a 90 percent probability of a rate hike priced in before the decision.