The Federal Reserve resumed raising interest rates after more than three years, raising interest rates by 25 basis points to 3.75%-4%.

China News Service, New York, September 16 (Reporter Wang Fan) The U.S. Federal Reserve announced on the 16th that it would raise the target range of the federal funds rate by 25 basis points to a level between 3.75% and 4%. This is the first time the Federal Reserve has raised interest rates since July 2023, in line with general market expectations.

The Federal Reserve issued a unanimous statement after its two-day regular monetary policy meeting, saying that in order to support the Federal Reserve's dual missions, it decided to raise the target range of the federal funds rate by 25 basis points and will continue to pursue the policy of maintaining adequate reserves in the banking system.

The statement said that U.S. economic activity is expanding steadily. Although uncertainty caused by geopolitical and other factors remains high, domestic consumption remains resilient. Productivity growth is strong and capital investment is brisk. Employment growth has kept pace with labor force growth, and the unemployment rate has changed little. Inflation remains high. This policy action will help achieve the 2% inflation target set by the Federal Reserve more quickly. The Fed will work to achieve price stability.

In the summary of economic forecasts released that day, the interest rate dot plot showed that other officials except Federal Reserve Chairman Warsh expected the median federal funds rate to rise to 4.1% by the end of 2026 and maintain it until the end of 2027, suggesting that there may be one more interest rate increase this year, and there may be no further interest rate increases next year.

Warsh said at a press conference after the regular monetary policy meeting that he would not provide forward guidance, but would make assessments based on changes in economic data and information from the market. Individual data are often "full of noise", and trends are the most important. The U.S. inflation rate has been above the target level for more than five consecutive years. Currently, the Federal Reserve's top priority is to achieve price stability.

Mr Warsh said it was difficult to describe current financial conditions as restrictive. The Fed will achieve its price stability goals in a "more timely manner" and this "withdrawal" of some of its easing policies is an important step. Only by achieving price stability can the economy maintain sustained and steady growth.

On the same day, the three major U.S. stock market indexes gave up their intraday gains during Warsh's speech and eventually ended lower. The Wall Street Journal reported that Warsh's "hawkish tone" caused investors to change their expectations, believing that the Federal Reserve will promote further tightening of financial conditions. Bloomberg reported that the interest rate hike has heightened market concerns about possible expansion of inflationary pressures, which may no longer be just a temporary phenomenon caused by tariffs and the war in Iran pushing up energy prices.

After the Federal Reserve resumed raising interest rates for the first time in more than three years, U.S. President Trump once again posted on social media calling for an interest rate cut. He said the federal funds rate "should be at 1%, or lower," and emphasized in capital letters, "Lower U.S. interest rates, and fast." (over)