Federal Reserve Hikes Rate to Combat Stubborn Inflation

The Federal Reserve has raised its benchmark interest rate for the first time in three years to combat stubbornly high inflation. The quarter-point increase lifts the Fed's key rate to about 3.9%, which could lead to higher borrowing costs for mortgages, auto loans, and credit cards.

In a quarterly projection, the Fed signaled it expects to hike rates again later this year to 4.1%. This move is aimed at supporting a 'timelier return' to the central bank's 2% inflation goal.

The rate hike comes as Americans are struggling with high costs for groceries, gas, and housing. The upcoming midterm elections have affordability taking center stage.