Fed Raises Interest Rates to Combat Stubborn Inflation

The US Federal Reserve has raised its benchmark interest rate for the first time since 2023 to combat persistent high inflation.

The rate hike, which is a quarter-point increase, lifts the Fed's key rate to about 3.9 percent and could result in higher borrowing costs for mortgages, auto loans, and credit cards.

In a set of quarterly projections, the Fed also signalled that its rate-setting committee expects to hike rates a second time to 4.1 per cent.

Fed Chair Kevin Warsh emphasized that the economy has shown signs of gathering speed since the central bank decided to keep rates unchanged in late July.