Federal Reserve Votes 12-0 To Raise Benchmark Rate To 3.75%-4%

The Federal Reserve voted unanimously 12-0 to raise its benchmark interest rate by a quarter percentage point to a target range of 3.75% to 4% on Wednesday, marking its first rate hike since 2023.

“The Federal Reserve raised interest rates on Wednesday and flagged further increases”

Reuters

In a post-meeting statement, the Federal Open Market Committee said, "Inflation remains elevated," and it added that "Today's policy action will support a timelier return to the Committee's 2 percent goal."

@coindesk

Reuters reported that new U.S. central bank chief Kevin Warsh joined the unanimous decision and that the Fed flagged further increases in borrowing costs in coming months.R

Reuters also said the overnight funds rate moved to 3.75%-4.00% and that new policy projections showed 16 of 18 policymakers anticipate at least one more quarter-percentage-point hike by the end of this year.R

The Guardian described the decision as chair Kevin Warsh’s first major step to try to tamp down inflation, noting the Fed’s open market committee raised the rate by a quarter-percentage point to 3.75% to 4%.T

At a press conference after the meeting, Kevin Warsh said, "inflation remains elevated. Today's policy action will support a timelier return to the committee's 2% goal."

The Guardian reported that Warsh asserted, "We stay in our lane," while declining to comment on Trump’s demands and threats and how he might react.T

Al Jazeera

Reuters said the dollar rose against the euro after the Fed’s announcement, while U.S. RTreasury bond yields held largely steady, with the 10-year Treasury yield trading at 4.958% compared with 4.946% just prior to the announcement.

Reuters also reported that the S&P 500 index rose 0.3% and the Nasdaq Composite rose 0.7%, while CME Group’s FedWatch Tool showed market bets on a rate hike at the Fed's next meeting in late October ticked higher to 56.5% from 54%.R

CNN reported that stocks fell and that the 10-year Treasury yield moved back to its highest level since 2007 as markets digested Warsh’s remarks, with the decision described as unanimous among the Fed’s rate-setting committee.

The Fed’s new policy projections showed 16 of 18 policymakers anticipate at least one more quarter-percentage-point hike by the end of this year, while only two saw rates remaining stable from here, according to Reuters.R

“16 of 18 policymakers anticipate at least one more quarter-percentage-point hike”

Reuters

Reuters said the policy rate was projected to rise to the 4.00%-4.25% range by the end of this year and end 2027 at the same level, while the statement withheld forward guidance about coming policy decisions.R

The Guardian reported that Warsh said the Fed concluded, "the plain fact is that inflation is too high and has been for too long," and it also quoted Republican representative Jason Smith of Missouri saying, "interest rates should be coming down, not going up."T

CBS News said Warsh told reporters, "For more than five years, inflation has been running above target," and it reported that policymakers expect to hold rates steady throughout 2027.

CNBC said the Fed signaled another hike is to come this year, and it reported that the Federal Open Market Committee voted 12-0 to increase the key interest rate by 25 basis points to 3.75%-4%.