Fed Raises Rates for First Time Since 2023 Amid Persistent Inflation

The US Federal Reserve has raised interest rates for the first time since 2023, with the benchmark overnight rate increasing by a quarter of a percentage point to between 3.75% and 4%. The decision was made under new Fed Chief Kevin Warsh, who took office in late May after being selected by President Donald Trump.

Warsh's leadership marked a shift from expectations that he would cut rates. Instead, the Fed decided to acknowledge the ongoing inflation pressures and raise interest rates. This move reflects the central bank's continued focus on addressing persistent inflation, which has moderated but remained elevated enough to prompt additional action.

The new policy projections show 16 of 18 policymakers anticipate at least one more quarter-percentage-point hike by the end of this year. The rate increase was widely expected, and investors will look to Warsh for further information on what might prompt further increases in borrowing costs.