Federal Reserve raises benchmark rate to 3.75%–4% and signals further hikes

The Federal Reserve raised its benchmark federal funds rate by 25 basis points to a target range of 3.75%–4%, its first increase in three years. The move was widely anticipated, and the Nasdaq was reported to have risen 6.67% afterward, according to the cited Wall Street Journal account.

Officials’ projections pointed to further tightening: 12 policymakers expected one more increase this year, four expected two more, and two expected rates to remain at 3.75%–4%. The inflation outlook was described as having been reshaped by an energy-price shock and a surge in AI investment. Some market reactions characterized the decision as more hawkish than expected because the outlook no longer included an anticipated rate cut the following year.