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Fed Hikes Rates for First Time Since 2023

The Federal Reserve lifted the federal funds rate by a quarter‑point to a 3.75‑4.00% target range, its highest level since December 2025, on a unanimous vote. Chairman Kevin Warsh said the move reflects persistent inflation above the 2% goal, and that the Fed will keep rates steady through 2027. In its quarterly projections, the Fed signaled a possible further hike later in 2026, but warned it is not the start of a new tightening cycle. The decision came amid rising energy costs driven by the Iran war, which has pushed the August CPI to 3.4% year‑over‑year. Wall Street reacted with a 1.2% drop in the Dow and a 0.4% decline in the S&P 500, as investors weighed the impact on borrowing costs. Banks are expected to raise rates on credit cards, auto loans and mortgages, adding pressure to household budgets. Consumer sentiment fell 13% from the same period last year, underscoring the broader economic slowdown.

· CBS News

The essential points

  1. 01Fed raises federal funds rate to 3.75‑4.00%, highest since Dec 2025
  2. 02Unanimous vote signals focus on price stability, no hikes in 2027
  3. 03CPI at 3.4% in August, driven by Iran‑war‑related energy spikes
  4. 04Stocks fell: Dow down 631 points, S&P 500 down 0.4%
The full brief

The Federal Reserve lifted the federal funds rate by a quarter‑point to a 3. 75‑4. 00% target range, its highest level since December 2025, on a unanimous vote. Chairman Kevin Warsh said the move reflects persistent inflation above the 2% goal, and that the Fed will keep rates steady through 2027.

In its quarterly projections, the Fed signaled a possible further hike later in 2026, but warned it is not the start of a new tightening cycle. The decision came amid rising energy costs driven by the Iran war, which has pushed the August CPI to 3. 4% year‑over‑year. Wall Street reacted with a 1.

2% drop in the Dow and a 0. 4% decline in the S&P 500, as investors weighed the impact on borrowing costs. Banks are expected to raise rates on credit cards, auto loans and mortgages, adding pressure to household budgets. Consumer sentiment fell 13% from the same period last year, underscoring the broader economic slowdown.