Last Updated on September 17, 2026 9:03 pm by INDIAN AWAAZ
AMN/ WEB DESK
The Federal Reserve in United States raised its benchmark interest rate for the first time since 2023 in an effort to lower persistent high inflation. The central bank also signalled that another rate hike could occur later this year. The quarter-point increase lifts the Fed’s key rate to about 3.9 percent and, over time, could result in higher borrowing costs for mortgages, auto loans, and credit cards. In a set of quarterly projections, the Fed also signalled that its rate-setting committee expects to hike rates a second time to 4.1 per cent.
The move comes as Americans are already struggling with high costs for groceries, gas, and housing. Affordability has taken on a leading role in the upcoming midterm elections, just seven weeks away.
In a press conference following the Fed’s announcement, Chair of Federal Reserve, Kevin Warsh emphasised that the economy has shown signs of gathering speed since the central bank decided to keep rates unchanged in late July. Inflation has also remained stubbornly above the Fed’s 2 per cent target and he noted that there is little sign it is cooling. Warsh also said renewed combat between the US and Iran, which has driven up gas prices, also convinced Fed officials to support rate hikes.
According to the Fed’s preferred measure, inflation was 3.7 per cent in July this year compared with a year ago, up from 2.3 per cent in April last year, just before Trump unveiled sweeping tariffs.
US President Donald Trump has called for sharply lower interest rates following Fed’s decision. In a post on Truth Social, Trump asserted that US interest rates should be 1 per cent, or less, maintaining that the nation warrants cheaper credit. Trump also associated his demands for monetary relaxation with the national trade balance, asserting that the country could accumulate a minimum of 1.5 trillion dollars annually by halting commerce with states generating a trade deficit.