Federal Reserve raises interest rates for the first time since July 2023
Quick Look
- The Federal Reserve raised interest rates from 0.25% to between 3.75% and 4%, the first increase since July 2023 after six consecutive cuts.
- The US central bank expects another increase by the end of the year to combat inflation, which it sees at 3.7% by the end of 2026.
AI-generated summary
Why It Matters
Prior to this hike, the Federal Reserve had cut rates six times since July 2023 by a total of 175 basis points.
The Federal Reserve raises interest rates in its third board meeting with Kevin Warsh as president. The cost of money, in line with expectations, rises from the range between 3.50% and 3.75% to that between 3.75% and 4%. This is the first increase since July 2023: since then, before today's decision, the FOMC had reduced rates six times, for a total of 175 basis points.
The Federal Reserve sees another rate hike by the end of the year to combat inflation, reports the note released at the end of the FOMC meeting. During the two-day closed-door meeting, the FOMC revised its forecasts for the US economy: inflation to 3.7% on an annual basis by the end of 2026, according to the median of the projections, compared to the 3.6% estimated at the June meeting. Benchmark interest rates will be between 4%-4.25% by the end of the year, above the level announced today.
What to Watch
AI outlook — possibilities, not facts
The Federal Reserve will make another rate hike by the end of 2026
Likely · Within months
Open Questions
- What will be the concrete effects of the increase on loans and mortgages?
- How will stock markets react to the news in the medium term?
