Fed Raises Interest Rates for First Time in Over Three Years Amid Rising Energy Prices

The Federal Reserve raised interest rates for the first time in over three years by a quarter percentage point to a range of 3.75% to 4%, its first increase since July 2023.

The decision was unanimous and came after months of rising energy prices linked to the Middle East conflict added to U.S. inflation pressures.

Fed officials have been watching resilient domestic spending, a relatively stable labor market, and strong capital investment as they assess inflation.

The immediate market response extended beyond the United States, with the dollar climbing to a seven-week high before giving back some of those gains as oil prices declined.

Mark Zandi, chief economist at Moody's Analytics, said the Fed decision and its policy signals were putting upward pressure on the dollar and downward pressure on other currencies.