The Fed raises rates for the first time since 2023
The Fed raised its policy rate by 25 basis points to 3.75-4% to fight inflation fuelled by rising oil prices.
The decision
The Federal Open Market Committee voted 12-0 on September 16 to raise rates by 25 basis points. The new target range is 3.75-4%. It is the first increase since 2023.
Why
Inflation is well above the 2% target. Core PCE is near 3.4% and headline measures were revised up to 3.7%. The jump in oil prices adds pressure. Chair Kevin Warsh promised a timelier return to 2%.
What markets expect
Markets price one more 25 basis point hike this year and further hikes into 2027. Assets that pay no interest, such as bitcoin and gold, are under pressure from that outlook.
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