Fed Hikes Rates as Inflation Fight Enters New Phase

The Federal Reserve has raised interest rates for the first time in three years as it attempts to combat inflation, which has been above its target of 2% for five consecutive years.

Fed Chair Kevin Warsh described the decision to raise rates by 0.25% as 'removing a dose of accommodation,' indicating that the current monetary policy is not sufficiently restrictive to inflation.

Inflation climbed to 3.4% year-over-year in August, with core inflation at 2.4%, still above the target.

Warsh noted that many categories are still above 3% over a six- and 12-month basis, and that the core is 'stuck' and not moving anywhere.