Fed Hikes Rates for First Time in Three Years Amid Stronger-Than-Expected Inflation

The U.S. Federal Reserve raised interest rates for the first time in three years and two months, citing inflation pressure that proved stronger than expected.

The Fed lifted its benchmark rate by 0.25 percentage points to a range of 3.75% to 4.00% on the 16th, with all 12 voting members supporting the decision.

Fed Chair Kevin Warsh said at a news conference that inflation was too high and had persisted too long, and that the move would help return price growth to the 2% target.

Warsh described the increase as an adjustment that reverses part of the three rate cuts made last year, but 16 of the 18 members other than Warsh backed a further increase this year, signaling a hawkish tone.