Federal Reserve raises rates for first time since 2023
The US Federal Reserve has raised interest rates for the first time since 2023 to combat inflation driven by energy price spikes. The decision follows a unanimous vote by the FOMC and aims to reach a 2% inflation target ahead of upcoming midterm elections.
Why it matters
This shift in monetary policy impacts borrowing costs for consumers and businesses, signaling a potential cooling of the US economy.
The US Federal Reserve has raised rates for the first time since 2023 as chair Kevin Warsh defied US president Donald Trump ’s calls for lower borrowing costs and tries to curb the jolt of inflation sparked by the Iran war.
The Federal Open Market Committee (FOMC) voted unanimously to increase the benchmark federal funds rate by a quarter point to a 3.75 per cent to 4 per cent range, in line with Wall Street’s expectations.
The FOMC said the rise “will support a timelier return” of inflation to the Fed’s 2 per cent target – a goal it has missed for 5½ years.
“The committee will deliver price stability,” it added.
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