Fed Hikes Rates Amid Ongoing Economic Pressures

The Federal Reserve raised its benchmark interest rate by 25 basis points to a target range of 3.75% to 4% on September 16, marking its first rate hike in more than three years.

Chairman Kevin Warsh described the move as essential to restoring the Fed's credibility on inflation after five years of prices running above the 2% target.

The indicators behind the decision are real: consumer prices rose 3.4% over the 12 months ending in August, while core inflation ran at 2.5%.

The Iran conflict and tariffs contributed to energy price shocks and pushed apparel prices up 4.8% and sports equipment up 4.2% at their peak.