The US Federal Reserve has raised its benchmark interest rate by 25 basis points to a target range of 3.75-4 percent, its first rate increase since July 2023.
The decision came after the Federal Open Market Committee’s September 15-16 meeting which realized that inflation was still above the Fed’s 2 percent target and economic conditions were pretty bad.
The increase was approved unanimously by the voting members of the committee.
The Fed’s latest projections also point to the possibility of another 25-basis-point increase before the end of 2026, although future decisions will depend on incoming economic data.
The latest move reverses the rate cuts seen in 2025, when the Fed lowered borrowing costs as inflation eased.
Higher US interest rates can increase global borrowing costs and put pressure on emerging-market currencies and capital flows. The Iran war in particular has strained key factors supporting the US economy.
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