Federal Reserve raises interest rate to a quarter point
UPDATE (12:46 PM): For the first time in three years, the Federal Reserve raised its benchmark interest rates, impacting almost everything from car loans to credit card interest rates.
The Fed's hike of a quarter percentage point means you'll be paying more to borrow money, and the ripple effect could hit mortgage rates.
The Fed's policymakers unanimously supported the rate hike and signaled one more hike could come before the end of the year.
"The Fed has an enormous amount of power.
These are decisions we make, but getting the understanding right between financial markets and the Fed is a balance that I've long thought could be better struck. We made this decision today based on our assessment of the situation, based on our assessment of the trajectory for employment, based on our judgment on the strength of the economy. Sometimes the market tries to prejudge our outcomes. I'll observe market prices and and see what they have to say. But today was our decision.
On the American people, as I said in my prepared remarks, the least well off are the ones have the most to gain from stable prices, the decision we made today was the right decision to deliver on the remit that Congress gave us to ensure stable prices. Moreover, I would say because of the underlying strength of the economy, because we are, as I mentioned, largely acting consistent with full employment, we can be focused on stable prices. Some months ago, I said we will deliver stable prices. Today's action is consistent with that."
Kevin Warsh, Federal Reserve Chairman
The Fed's decision defies President Donald Trump's wishes for lower interest rates.
The move comes after a more than 75% surge in the price of oil this year. That has translated into gas prices that have soared more than 45% since the Iran war began.
To watch the livestream of the announcement, see attached video.
WASHINGTON (NBC, KYMA) - The Federal Reserve is expected to decide Wednesday whether to raise interest rates to fight rising inflation.
Wall Street expects the Fed to hike rates, while President Donald Trump has repeatedly urged the Central Bank and it chair, Kevin Warsh, to cut rates.
The Fed has not raised interest rates since 2023, when Joe Biden was president and the economy was contending with sky-high inflation.
But market odds for an interest rate increase were at more than 90% Tuesday after inflation data for August came in hot at a 3.4% annual clip.
The Fed's target for inflation is 2%.
Meanwhile, U.S. Treasury bond yields rose to 5.04% Tuesday, the highest since July 2007, amid concerns about rising inflation.
