Fed raises benchmark rate to 3.75%-4% in first hike since 2023

The Federal Reserve increased its benchmark federal funds rate by 25 basis points on Wednesday, lifting the range to 3.75%–4%. It was the first hike since 2023 and the first action taken by Chair Kevin Warsh since President Donald Trump appointed him.

The decision followed strong inflation data, with August CPI rising 0.4% month‑over‑month, quadrupling the pace of July. By Tuesday, market futures had priced in a 93% chance of a hike, making the Fed’s move a timely response to the inflationary trend.

The Fed’s statement noted that productivity growth and capital investment were robust, and that the committee’s median forecast now expects the federal funds rate to finish 2026 at 4.1%. Warsh also highlighted the 54% of PCE components that had risen more than 3% over the prior 12 months, underscoring the committee’s focus on price stability.

Read the full story at fortune.com.