Federal Reserve raises rates for first time in three years
The Federal Reserve raised its benchmark interest rate by a quarter point on Wednesday, its first increase in three years, and signaled that more hikes could follow as it tries to bring inflation down.
Chair Kevin Warsh struck a tougher tone after the decision. The move will make borrowing on credit cards and other loans somewhat more expensive. Stocks fell after the announcement, with the Dow Jones Industrial Average down 631 points.
Federal Reserve policymakers projected one more rate increase in 2026 and none in 2027, while Warsh indicated the central bank could tighten further if inflation does not ease enough. Consumer inflation reached 4.2% in May before slowing to 3.4% in August, after running at 2.4% in January.
Warsh was appointed earlier this year by President Donald Trump to succeed Jerome Powell. Economists had questioned how firmly he would prioritize inflation after echoing some of Trump's support for lower rates, but his comments on Wednesday pointed to a more hawkish stance.
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