Fed hikes rates for first time since 2023, signals more increases ahead

The Federal Reserve just did something it hasn’t done in over three years: raised interest rates. The FOMC voted unanimously to lift the federal funds rate by 25 basis points to a target range of 3.75%-4%, ending a streak of five consecutive holds and marking the first hike since July 2023. The inflation problem that won’t quit Updated economic projections from the committee paint a picture that should make anyone hoping for a quick return to normal reconsider their timeline. The Fed now forecasts headline PCE inflation at 3.7% for 2026, with core inflation running at 3.4%. According to the committee’s own projections, they don’t expect to actually reach the 2% target until 2029. Stronger-than-expected inflation data and rising oil prices were cited as key factors behind the decision. The post-meeting statement acknowledged that economic activity remains solid, supported by robust domestic spending and productivity gains, but that inflation remains “elevated.” Chair Kevin Warsh, presiding over his first rate increase since taking office earlier this year, emphasized the Fed’s commitment to price stability. He framed the decision within a landscape of geopolitical uncertainties, ess...