Fed Raises Rates Amid Inflation Concerns

The Federal Reserve raised its federal funds rate by 25 basis points on Wednesday, setting the target range at 3.75%-4.00%. Fed Chair Kevin Warsh stated that stronger growth and insufficient progress on inflation necessitated the move, while rising geopolitical risk also played a role.

The updated projections from the Fed show inflation not returning to its target until 2029, but growth and employment forecasts have improved. Global bond yields experienced a slight decline following the announcement.

This week will see President Trump hosting Chinese President Xi Jinping in Washington, with markets watching for progress on trade agreements and export controls. Nine Federal Reserve officials are set to speak publicly, including Goolsbee and Williams, which could influence market expectations of further rate hikes.