Fed Hikes Rates Amid Iran-Driven Energy Shock

The Federal Reserve has raised its benchmark rate by 25 basis points to a target range of 3.75 to 4.00 percent, marking the first increase since 2023.

The decision was driven by Iran's campaign in the Strait of Hormuz, which has shut down vessel traffic and led to a surge in Brent crude prices above $108 per barrel.

The Fed argues that slowing domestic demand will put downward pressure on prices, but critics say this is a blunt instrument applied to the wrong end of the problem.

The European Central Bank faces pressure at its next meeting as a wider transatlantic rate differential could weaken the euro and import more inflation into the economy.