Federal Reserve Hikes Rates Amid Elevated Inflation Concerns

The US Federal Reserve raised interest rates by a quarter of a percentage point to the 3.75%-4.00% range, marking its first move in three years and the first policy shift under new Fed chief Kevin Warsh.

Warsh joined a unanimous decision that acknowledged the Trump administration's inability to control inflation despite President Donald Trump's promise to lower prices on his watch.

The rate hike was attributed to an economy picking up speed, with strong economic and job growth adding to price pressures. Warsh emphasized that domestic spending has been resilient, productivity growth is strong, and capital investment is robust.

Inflation remains elevated at 3.7%, according to updated quarterly projections, which also showed 16 of 18 policymakers anticipating at least one more quarter-percentage-point hike by the end of this year.

The dollar strengthened broadly, and yields on 2-year US Treasury notes shot to their highest in over two years after the release of the Fed's policy statement and projections.