Fed Rate Hike Sends Wall Street into Whirlwind as Inflation Fears Mount

Wall Street experienced a rollercoaster ride on Wednesday following the US Federal Reserve's decision to raise its key interest rate for the first time in over three years. The move aims to combat stubbornly high inflation, which has been driven up by soaring crude oil prices due to the ongoing war between the US and Iran.

The Fed stated that its decision was unanimous and more tightening is likely in the near future to achieve a timely drop in inflation. Ryan Detrick, chief market strategist at Carson Group, noted that the fact the rate hike was unanimous shows the Fed's commitment to tackling the broadening inflation backdrop.

Despite the Fed's move, investors will be closely watching for any clues regarding the path forward for interest rates during a press conference by Fed Chair Kevin Warsh. Earlier in the session, robust retail sales data suggested consumers are still spending despite an affordability squeeze due to rising prices, particularly at the petrol pump.

The three major US stock indices were gaining ground prior to the announcement, but took a hit afterwards. The Dow Jones Industrial Average fell 101.92 points, or 0.20 per cent, to 51,991.19, while the S&P 500 gained 21.09 points, or 0.28 per cent, to 7,606.82.