Fed Raises Interest Rates for First Time in Three Years Amid Ongoing War with Iran

The US Federal Reserve has raised interest rates for the first time in three years to combat persistently high inflation. The decision, made on September 17, 2026, comes as a result of the ongoing war with Iran and its impact on energy costs.

The target rate was increased by 0.25 percentage points to a band of 3.75 to 4 percent. This move is expected to support a return to the Fed's inflation goal of 2 percent, which has been consistently above that mark due to rising energy prices.

Rising petrol costs have contributed significantly to high inflation, with the price of Brent crude back above $US100 a barrel after falling back to nearly pre-war levels. The decision was widely expected, but may enrage President Donald Trump, who has campaigned for rate cuts and even called Fed chairman Kevin Warsh 'great' in his recent posts.

Analysts said the Fed's credibility is on the line with this decision, as persistently high inflation leaves little choice but to hike rates. The move is seen as a victory for those advocating for monetary tightening, but may have consequences for economic growth.