U.S. Fed Raises Interest Rates Amid Persistent Inflation Worries

The U.S. Federal Reserve raised its short-term interest rate by 25 basis points for the first time in three years, bringing it from a range of 3.5% to 3.75% to 3.75% to 4%. The move was made by Fed Chair Kevin Warsh and 11 members of the Federal Open Market Committee, citing high inflation as the reason.

Inflation has been a persistent issue in the U.S., with the Consumer Price Index reaching 3.4% in August, well above the Fed's 2% target. The rate had peaked at 4.2% in May before easing slightly, but remains a concern for policymakers.

Long-term bond yields have also been increasing, driven by inflation fears and heavy government borrowing. The benchmark 10-year U.S. Treasury bond yield crossed the key threshold of 5% on September 14, resulting in higher borrowing costs for the government.