US Federal Reserve Hikes Key Rate for 1st Time in 3 Years

The Federal Reserve raised its benchmark interest rate Wednesday for the first time since 2023 in an effort to quell stubbornly-high inflation, a move that could spur a sharp response from the White House. 

The quarter-point increase lifts the Fed's key rate to about 3.9% 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 later this year to 4.1%.

"Today's policy action will support a timelier return" to the central bank's 2% inflation goal, the Fed said in a statement. 

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.