Fed Poised to Raise Interest Rates Amid Stubborn Inflation

The Federal Reserve is poised to make its first rate hike since 2023 as inflation remains stubbornly above the central bank's target of 2%.

Core inflation, which excludes food and energy categories, rose 0.3% to 2.4% from a year ago, an improvement from the month prior but still above the central bank's target.

The Fed faces a challenging decision as it tries to balance the risk of allowing a prolonged shock to become embedded against weakening other parts of the economy that are not responsible for higher prices and are more sensitive to interest rates.

Investors have priced in a nearly 90% chance of an increase coming out of this week's meeting, according to the CME FedWatch tool, with another quarter-point hike by the end of the year expected to bring the Fed's benchmark interest rate up to 4% to 4.25%.