The regulator agreed to this move amid high inflation

The US Federal Reserve System (Fed) has raised the federal funds rate by 0.25 percentage points to 3.75–4% per annum. This is stated in a statement by the Federal Open Market Committee (FOMC) following its meeting on 16 September.

This was the first rate rise since July 2023; the FOMC reached its decision unanimously.

As noted in the regulator’s statement, economic activity is growing at a steady pace. Although uncertainty remains high, partly due to geopolitical events, domestic spending is resilient. Labour productivity growth is strong, and capital investment is substantial. Job growth is keeping pace with the growth in the labour force, and the unemployment rate has remained largely unchanged. A rise in inflation is also being observed.

Fed Chair Kevin Worsh explained the decision by saying that inflation is too high and has remained so for too long.

Updated forecasts indicate that the vast majority of Fed officials expect a further rate rise by the end of this year.

It should be recalled that in July this year, the US Federal Reserve left its key interest rate unchanged at 3.5–3.75% per annum. However, the decision was not unanimous; nine out of the 12 FOMC members voted in favour of it.