Federal Reserve Hikes Rates Amid Ongoing Price Pressures

The Federal Reserve raised interest rates by a quarter of a percentage point to between 3.75% and 4%, citing ongoing price pressures due to global import tariffs, an energy shock following the US-Israeli war with Iran, and capital spending from the AI boom.

New Fed Chairman Kevin Warsh joined the unanimous decision, which effectively acknowledges the Trump administration's inability to control inflation despite President Donald Trump's promise to lower prices on his watch.

The policy shift under Warsh marks a departure from expectations that he would cut rates. Instead, the Fed now projects the policy rate will rise to between 4% and 4.25% by the end of this year and remain at that level through 2027.