Fed Hikes Rates Amid Stubborn Inflation

The Federal Reserve raised its benchmark lending rate by a quarter of a percentage point to a target range of 3.75-4.00 percent, marking the first interest rate hike in three years.

Fed Chair Kevin Warsh said that inflation is the problem, as the current inflation rate remains stubbornly high at between 3.4 and 3.7%, well above the Fed's 2% target.

The improving labor market has allowed the Fed to be more confident in taking this action, with economist Guy Berger noting that the job market has outperformed expectations.

The hike will benefit savers, who can still find online interest rates of about 4% for high-yield savings accounts and short-term CDs. However, borrowers will continue to struggle under the weight of higher interest rates.