Federal Reserve raises interest 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 indicated a tougher stance than investors had expected after the decision. Fed policymakers projected one more rate increase in 2026 and none in 2027, while Warsh signaled the central bank could tighten further if inflation does not move back under control. The increase is expected to make borrowing, including credit card debt and other loans, somewhat more expensive.
Markets reacted negatively to the message. The Dow Jones Industrial Average fell 631 points after the announcement. Warsh, who was appointed earlier this year to succeed Jerome Powell, has said inflation remains too high, while higher oil prices linked to the war in Iran have added pressure to consumer prices.
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