Fed Hikes Rates for First Time Since 2025, Gap with ECB Widens

The Federal Reserve has raised interest rates for the first time since December 2025, increasing its benchmark rate to 3.75-4.00%.

This move, which was unanimous among Fed officials, comes just six days after the European Central Bank (ECB) raised its deposit rate by a quarter-point to 2.50%.

The new American range puts the Fed at a 1.375-point gap against the ECB, with the middle of the new range sitting at 3.875% for the Fed and 2.50% for the ECB.

The projections accompanying the Fed's decision indicate that it expects to hold rates at 4.1% by December and maintain this level through 2027, which would mean one more increase and no reductions.