US Central Bank Raises Interest Rates After More Than Three Years
The US Federal Reserve announced that it has raised interest rates to the 3.75-4 range in order to combat inflation.
The US Central Bank has unanimously raised interest rates after more than three years in order to combat rising inflationary pressures.
Decision to Increase Interest Rates
The Federal Reserve raised interest rates from the 3.5-3.75 percent range to the 3.75-4 percent range. This decision was made with a 12-0 unanimous vote by FOMC members.
Inflation Expectations and Energy Costs
While energy costs became the main driver of inflation, oil price increases stemming from the US-Iran war pushed gasoline and diesel prices upward. The central bank projects that inflation will decline in the coming years.
Future Interest Rate Expectations
Most policymakers expect interest rates to be raised to the 4 to 4.25 percent range by the end of this year. It is stated that economic activity is expanding at a solid pace.
Political Reactions and Emphasis on Independence
Despite previous criticisms from President Donald Trump, Fed Chair Kevin Warsh emphasized the importance of keeping politics out of decisions and central bank independence.