Fed Hikes Rates for First Time in Over Three Years

The Federal Reserve raised interest rates by 25 basis points on September 16, bringing the federal funds rate to a range of 3.75% to 4.00%. The decision was unanimous, with 16 of 18 officials expecting another increase before year-end.

Fed Chair Kevin Warsh emphasized that price stability takes priority over maximum employment, citing summer inflation readings that show little improvement in underlying trends.

The dollar surged to its highest level since late July, while the two-year Treasury yield spiked to approximately 4.744%, its highest since July 2024. Gold reversed sharply from earlier gains, falling 0.6% to $4,264.30 an ounce.