Fed raises rates to 4% in first hike since 2023 as inflation remains elevated

The Federal Reserve raised interest rates by 25 basis points on Wednesday, taking the federal funds rate to a range of 3.75% to 4% as policymakers moved to bring elevated inflation back toward the central bank’s 2% target. The move marked the Fed’s first rate increase since July 2023, when policymakers raised rates by 25 basis points to a range of 5.25% to 5.50%. The central bank later began cutting rates in September 2024 before bringing the target range down to 3.50% to 3.75% by the end of 2025. The Federal Open Market Committee approved Wednesday’s increase unanimously in a 12 to 0 vote. The Fed said inflation remains elevated and that the policy action would support a timelier return to its 2% goal. The decision was largely expected by markets. Hours before the announcement, the CME FedWatch Tool showed roughly an 88% probability of a 25 basis point increase. Markets were also pricing around a 54% chance that rates would remain at 3.75% to 4% following the Fed’s October meeting. Bitcoin traded near $75,500 before the announcement, down roughly 5% since the start of the week after the Senate failed to advance the CLARITY Act on Tuesday. The move had already weighed across the br...