The U.S. Federal Reserve (Fed) has increased its key interest rate by 25 basis points. Following a committee meeting this Wednesday, the bank announced that the key rate now falls within the range of 3.75% to 4.00%.
While the previous decision to hold the rate steady was settled with a nine-to-three vote, this time the resolution was unanimous. This marks the first interest rate hike by the central bank since 2023.
The Fed attributes the move to its dual mandate, which aims both for maximum employment and price stability. Regarding the job market, the central bank currently sees little cause for concern. It explained in the statement that employment growth is keeping pace with the increase in the working-age population and the unemployment rate has remained largely unchanged. Economic activity is growing at a solid pace. Despite ongoing uncertainty, largely stemming from geopolitical developments, domestic spending has proven resilient. Furthermore, the Fed noted that productivity growth is strong and capital investments are robust.
However, inflation remains at a high level. The monetary policy measures implemented are now intended to help support a timely return to the Federal Reserve’s 2% inflation target. The central bank committed to ensuring price stability.
