A stronger dollar and rising yields: How the Fed’s rate hike could hit global markets

Live updates

1. 1h ago

   Federal Reserve Raises Interest Rates as Global Markets React

   The United States Federal Reserve has approved an interest rate hike, raising borrowing costs to a range of 3.75% to 4.00% amid stubborn inflation. Policymakers on the rate-setting committee unanimously agreed to the increase, marking the first time the central bank has lifted rates since 2023. Nearly all policymakers also signaled that a second increase could occur later this year. The decision defies demands from Trump to lower rates and adds pressure to domestic consumer loans alongside global financial markets, widening the policy gap with international central banks.

   Why it matters

   This tightening cycle marks a significant shift for the central bank after years of holding rates steady to combat ongoing inflation pressures. The move immediately impacts consumer borrowing costs, including mortgages, car loans, and credit cards. And the hawkish pivot complicates the political dynamic surrounding upcoming midterms and sends ripple effects across international markets.

   What is confirmed

   • The Federal Reserve raised interest rates by 0.25 percentage points to a range of 3.75% to 4.00%.
   • The rate-setting committee unanimously agreed to the interest rate hike.
   • This policy action marks the first time the Federal Reserve has raised rates since 2023.
   • The latest increase widens the interest rate gap with Korea to 1 percentage point.

   Still unconfirmed

   • Kevin Warsh held a press conference detailing the key takeaways from the central bank's policy meeting.

   What to watch next

   • Whether the Federal Reserve follows through with a second rate increase later this year as signaled by policymakers.
   • Further reactions in global stock and currency markets following the initial sell-off and subsequent futures rise.
   Sources used for this update (18)

   1. nytimes.com — Live Updates: Warsh and Fed Officials Are Expected to Raise Interest Rates Despite Trump's Demands
   2. CNBC — Fed approves interest rate hike, signals one more to come this year
   3. foxbusiness.com — Federal Reserve hikes interest rates for first time since 2023 amid stubborn inflation
   4. NBC News — Fed raises interest rates for first time since 2023, defying Trump as inflation mounts
   5. The Washington Post — Here’s what a Fed rate hike means for your mortgage, car loan and credit cards
   6. WSJ — The Key Takeaways From Kevin Warsh’s Press Conference
   7. CNBC — Stock futures rise after Fed's rate hike spurs a market sell-off: Live updates
   8. CNN — The Fed was bullied into hiking rates. Now it hopes it didn’t royally screw up
   9. CNBC — The Fed is hiking again — and the rest of the world could feel the squeeze
   10. Bloomberg.com — Fed Hikes, Defying Trump’s Calls to Lower Rates
   11. Yahoo — US Federal Reserve Raises Interest Rates for First Time in Three Years
   12. WSJ — 💬 Money Quote: Start the Cycle
   confidence 95%