The Federal Reserve raised its benchmark interest rate by a quarter percentage point on Wednesday, the first increase since July 2023, with Fed Chair Kevin Warsh saying inflation has been "too high ... for too long."
The decision, reached by a unanimous 12-0 vote of the Federal Open Market Committee, brings the federal funds rate to a new target range of 3.75%–4%. The Fed's post-meeting statement pointed to persistent price pressures and a durable economy, declaring: "Inflation remains elevated. Today's policy action will support a timelier return to the Committee's 2 percent goal. The Committee will deliver price stability."
At a news conference following the decision, Warsh said the Fed needed to be confident "that underlying inflation is moving to our objective clearly and at sufficient speed," adding that the FOMC had determined "this standard has not been satisfied." He pointed to three converging factors — a robust labor market, inflation still running above target, and ongoing conflict in the Middle East — as driving the committee's unanimous vote.
The Dow Jones Industrial Average shed more than 400 points in afternoon trading following the Fed's move. The S&P 500 and the tech-heavy Nasdaq Composite also slumped.
Updated economic projections released Wednesday showed FOMC participants nudged their inflation forecasts higher. The median projection for headline PCE inflation this year rose to 3.7% and core PCE to 3.4%, each up 0.1 percentage point from the June forecast, the Fed said. Officials do not expect inflation to return to the 2% target until 2029. The median unemployment rate projection for 2026 fell to 4.1%, down from 4.3% in June, while the GDP growth outlook rose to 2.3% from 2.2%.
#federal #rate #committee
The decision, reached by a unanimous 12-0 vote of the Federal Open Market Committee, brings the federal funds rate to a new target range of 3.75%–4%. The Fed's post-meeting statement pointed to persistent price pressures and a durable economy, declaring: "Inflation remains elevated. Today's policy action will support a timelier return to the Committee's 2 percent goal. The Committee will deliver price stability."
At a news conference following the decision, Warsh said the Fed needed to be confident "that underlying inflation is moving to our objective clearly and at sufficient speed," adding that the FOMC had determined "this standard has not been satisfied." He pointed to three converging factors — a robust labor market, inflation still running above target, and ongoing conflict in the Middle East — as driving the committee's unanimous vote.
The Dow Jones Industrial Average shed more than 400 points in afternoon trading following the Fed's move. The S&P 500 and the tech-heavy Nasdaq Composite also slumped.
Updated economic projections released Wednesday showed FOMC participants nudged their inflation forecasts higher. The median projection for headline PCE inflation this year rose to 3.7% and core PCE to 3.4%, each up 0.1 percentage point from the June forecast, the Fed said. Officials do not expect inflation to return to the 2% target until 2029. The median unemployment rate projection for 2026 fell to 4.1%, down from 4.3% in June, while the GDP growth outlook rose to 2.3% from 2.2%.
#federal #rate #committee
2 months ago
