Fed Raises Rates Amid Ongoing Conflict Driven Inflation

The Federal Reserve raised its benchmark interest rate by a quarter point to a target range of 3.75 to 4.00 percent, marking the first increase since 2023.

This decision was driven by Iran's war, which has pushed energy prices higher and contributed to inflation running at 3.7 percent over the past 12 months, according to Fed Chair Kevin Warsh.

Warsh had previously stated that the responsibility for sustained, elevated inflation 'sits squarely with the central bank,' and that progress over the past two years had been 'modest.'

The rate hike is expected to have a significant impact on emerging economies, where dollar-denominated sovereign debt has grown substantially over the past decade.