Fed increases key interest rate by 0.25 percentage points to 3.75 to 4.00 percent

New York, Düsseldorf. The US Federal Reserve (Fed) increased the key interest rate by 0.25 percentage points. The interest rate range is therefore 3.75 to 4.00 percent, as the Fed announced on Wednesday. An increase had been priced in on the futures markets with a probability of around 92 percent.

The Fed last raised the key interest rate in July 2023. The background for the current step is probably, among other things, the persistently high inflation in the USA.

In August, prices in the USA rose by 3.4 percent year-on-year. Core inflation, which is particularly relevant for the Fed and excludes more volatile prices for energy and food, was 2.4 percent. The inflation rate has therefore been above the Fed's target of two percent for a good five years.

The surprisingly strong labor market data from last week also spoke in favor of an interest rate increase. High job growth signals that the economy could withstand higher interest rates without being slowed down too much. The Fed's dual mandate is intended to ensure stable prices and full employment.