The Federal Reserve raised its benchmark interest rate by 0.25 percentage point on Wednesday, marking its first increase in 3 years and 2 months. The unanimous 12-0 vote followed a two-day Federal Open Market Committee meeting in Washington.
The move lifts the federal funds target range to 3.75% to 4.00%, putting the top of the range 1 percentage point above South Korea’s current 3.00% rate. The Fed also signaled in its updated economic projections that it could raise rates once more before the end of the year, at its October or December meeting.
In a post-meeting news conference, Fed Chair Kevin Warsh said inflation has remained too high for too long and said the policy action should help bring price growth back to the central bank’s 2% target in a timely way. He also said people responsible for trade and fiscal policy should stay within their own areas.
The stronger-than-expected move adds to a global tightening trend as central banks respond to inflation pressure and higher oil prices. In Asia, the Bank of Korea raised rates last month, and the Bank of Japan is also seen as increasingly likely to act soon.
