US Fed raises interest rates as inflation weighs on economy

According to Al Jazeera – Breaking News, World News and Video from Al Jazeera, the United States Federal Reserve has implemented a 25 basis-point increase to interest rates, moving them to a range of 3.75 percent to 4 percent. This marks the first such hike in over three years, occurring shortly before the midterm elections despite calls from President Donald Trump to decrease rates. Officials stated the move is intended to address persistent inflation and move the economy closer to the central bank’s 2 percent target.

The decision follows rising fuel costs linked to the conflict involving the U.S., Israel, and Iran, which have pushed Brent crude to approximately $109 per barrel. Data from the American Automobile Association indicates that petrol prices have reached $4.36 per gallon, while diesel prices have hit a record average of $6.31. Additionally, consumer prices rose by 0.4 percent in August, and the 10-year Treasury yield recently surpassed 5 percent, reaching a 19-year high.

Experts like Michael Klein of Tufts University suggest the economy is in an unusual position, characterized by low unemployment alongside stubborn inflation. While higher interest rates generally serve to cool economic activity, Klein noted that because markets had anticipated the increase, the move was largely already priced in. Fed officials have indicated that they expect one additional rate hike to occur before the end of the year.

Source: Al Jazeera – Breaking News, World News and Video from Al Jazeera — https://www.aljazeera.com/economy/2026/9/16/us-fed-raises-interest-rates-as-inflation-weighs-on-economy?traffic_source=rss