{"id":2018,"date":"2026-09-17T08:33:45","date_gmt":"2026-09-17T08:33:45","guid":{"rendered":"https:\/\/newsraise.com\/in\/2026\/09\/17\/fed-raises-interest-rates-first-time-three-years\/"},"modified":"2026-09-17T08:33:45","modified_gmt":"2026-09-17T08:33:45","slug":"fed-raises-interest-rates-first-time-three-years","status":"publish","type":"post","link":"https:\/\/newsraise.com\/in\/2026\/09\/17\/fed-raises-interest-rates-first-time-three-years\/","title":{"rendered":"U.S. Fed hikes rates by 25 bps, first increase in over three years"},"content":{"rendered":"\n<!-- Quick Adsense WordPress Plugin: http:\/\/quickadsense.com\/ -->\n<div class=\"9fece8afa224fd09e54b043d0febfb58\" data-index=\"1\" style=\"float: none; margin:10px 0 10px 0; text-align:center;\">\n<script async src=\"https:\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\"><\/script>\r\n<!-- NR ATF -->\r\n<ins class=\"adsbygoogle\"\r\n     style=\"display:block\"\r\n     data-ad-client=\"ca-pub-8898941184964366\"\r\n     data-ad-slot=\"4839033563\"\r\n     data-ad-format=\"auto\"\r\n     data-full-width-responsive=\"true\"><\/ins>\r\n<script>\r\n     (adsbygoogle = window.adsbygoogle || []).push({});\r\n<\/script>\n<\/div>\n<p>The United States Federal Reserve announced on Wednesday that it will raise its benchmark interest rate by a quarter of a percentage point, moving the target range to between 3.75\u202fpercent and 4\u202fpercent.  The move marks the first rate hike in more than three years and comes as inflation, amplified by soaring fuel prices linked to the ongoing US\u2011Iran conflict, continues to strain the economy.<\/p>\n<h2>Fed\u2019s rationale and outlook<\/h2>\n<p>In a formal statement, the Fed said that \u201ceconomic activity is expanding at a solid pace\u201d while acknowledging that \u201cuncertainty remains elevated owing, in part, to geopolitical developments.\u201d  The statement added that domestic spending has stayed resilient despite those headwinds.  At the same time, the central bank noted that \u201cinflation remains elevated\u201d and that the policy action is intended to \u201csupport a timelier return to the Committee\u2019s 2\u202fpercent goal\u201d and to deliver price stability.<\/p>\n<p>Looking ahead, Fed officials project one additional rate increase before the end of the calendar year and anticipate that rates will remain unchanged throughout the following year, according to their quarterly projections.<\/p>\n<p>Market expectations shifted sharply in the days preceding the decision.  CME FedWatch, which gauges the probability of monetary\u2011policy moves, assigned a 92.3\u202fpercent chance that the Fed would raise rates to the 3.75\u20114\u202fpercent band, up from a 40\u202fpercent chance of a quarter\u2011point increase just a week earlier.<\/p>\n<h2>Recent economic data driving the move<\/h2>\n<p>Several data points released in August reinforced the Fed\u2019s inflation concerns.  Consumer\u2011price inflation rose by 0.4\u202fpercent on a month\u2011over\u2011month basis\u2014the strongest gain in four months\u2014while the annual rate held steady at 3.4\u202fpercent, matching July\u2019s increase.  The labor market, meanwhile, remained robust, with unemployment described as \u201ccomfortable\u201d by analysts.<\/p>\n<p>Fuel prices have surged alongside the geopolitical tension.  Brent crude hovered near $109 per barrel on Tuesday, and the American Automobile Association (AAA) reported that the average price for a gallon of gasoline climbed to $4.36, up 14\u202fcents in the past week and higher than the $4.06 average recorded the month before.  Diesel prices reached $6.31 per gallon, the highest average on record and roughly double the level a year earlier.  Because diesel fuels the trucks that haul a wide range of goods\u2014from produce to steel\u2014such price spikes are expected to feed further inflationary pressure.<\/p>\n<p>Bond markets also reflected the heightened inflation outlook.  The benchmark 10\u2011year Treasury yield broke above the psychologically important 5\u202fpercent threshold on Tuesday, reaching 5.02\u202fpercent, the highest level in 19\u202fyears.  The yield serves as a reference point for borrowing costs across the economy, influencing rates on mortgages, auto loans and corporate debt.<\/p>\n<h2>Expert commentary and political reaction<\/h2>\n<p>Michael Klein, a professor of international economic affairs at Tufts University\u2019s Fletcher School and executive editor of the nonpartisan publication EconoFact, described the current environment as \u201cunusual.\u201d  He noted that while unemployment remains at a comfortable level, \u201chigher prices continue to stick, sending inflation beyond the Fed\u2019s target of 2\u202fpercent.\u201d  Klein added that \u201cthere has been a lot of pressure on Chairman Warsh to raise interest rates because of inflation coming in high, and that has been compounded by concerns about Trump\u2019s pressure.\u201d<\/p>\n<p>President Donald Trump responded on his Truth Social platform shortly after the Fed\u2019s decision, arguing that \u201cInterest Rates in the United States should be 1\u202fpercent, or less, because we are the Best Credit in the World \u2014 BY FAR. Our Country is BOOMING with new Investment!\u201d  He urged a rapid reduction in rates, but did not address Fed Chair Kevin Warsh by name.<\/p>\n<p>When later questioned about his confidence in Warsh, Trump said he was \u201crelying on Kevin\u201d but characterized the board as \u201cvery tough\u201d and suggested that \u201cthe interest rates are too high. They\u2019re not appropriate.\u201d  He reiterated criticism of former Fed Chair Jerome Powell, whose tenure he has repeatedly attacked and for which a criminal probe was launched\u2014a move Powell described at the time as a \u201cpretext\u201d to undermine the Fed\u2019s independence.<\/p>\n<p>The White House did not immediately respond to Al\u202fJazeera\u2019s request for comment on the rate increase.<\/p>\n<p>Analysts such as Klein argue that higher rates typically dampen economic activity, but note that markets may have already priced in the Fed\u2019s move, potentially limiting immediate disruption.  The rise in Treasury yields, for example, could stabilize if investors accept the new policy stance as a foregone conclusion.<\/p>\n<p>Overall, the Fed\u2019s decision underscores a balancing act: curbing inflation without derailing the solid growth and employment trends that have characterized the recent U.S. economic cycle.  As fuel prices remain volatile and geopolitical risks linger, policymakers and market participants will be watching closely for signs of how the higher\u2011rate environment influences consumer spending, corporate investment and the broader trajectory of price stability.<\/p>\n\n<div style=\"font-size: 0px; height: 0px; line-height: 0px; margin: 0; padding: 0; clear: both;\"><\/div>","protected":false},"excerpt":{"rendered":"<p>The Federal Reserve lifted its benchmark rate by a quarter\u2011point to a 3.75\u20114% range, its first hike in more than three years, as fuel\u2011price\u2011driven inflation pressures mount.<\/p>\n","protected":false},"author":3,"featured_media":2019,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[299],"tags":[2114,1764,498,2112,2113],"class_list":["post-2018","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-energy-prices","tag-federal-reserve","tag-inflation","tag-interest-rates","tag-us-economy","entry"],"_links":{"self":[{"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/posts\/2018","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/comments?post=2018"}],"version-history":[{"count":0,"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/posts\/2018\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/media\/2019"}],"wp:attachment":[{"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/media?parent=2018"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/categories?post=2018"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/tags?post=2018"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}