US Fed Hikes Interest Rates to Combat Stubborn Inflation Brought on by Rising Energy Costs

The US Federal Reserve has raised interest rates by 25 basis points to 3.75-4% in response to stubbornly high inflation, driven primarily by energy prices.

The decision, supported by all committee members, comes as US consumer prices rose 0.4% in August, maintaining a 12-month rate of 3.4%, according to the US Bureau of Labour Statistics.

Fed chair Kevin Warsh acknowledged that 'inflation is too high and has been for too long', echoing concerns about energy price hikes, with gas prices reaching $4.43 per gallon and diesel at roughly $6.4, up from $3.7 a year ago.