[Update 2] US Fed raises benchmark interest rate by 0.25%p... First tightening measure in 3 years and 2 months

[Update 2] US Fed raises benchmark interest rate by 0.25%p... First tightening measure in 3 years and 2 months

The Federal Reserve (Fed), the central bank of the United States, raised the benchmark interest rate by 0.25 percentage points (p) to an annual 3.75-4.00%.

The Fed announced on the 16th (local time) that it made this decision as a result of the two-day Federal Open Market Committee (FOMC) meeting held in Washington D.C. This is the first monetary tightening measure in 3 years and 2 months since July 2023.

The Fed previously lowered interest rates three consecutive times in September, November, and December of 2024, and in September, October, and December of last year, respectively. This year, it has frozen interest rates five consecutive times.

The Fed's interest rate hike is interpreted as a measure to address price instability.

Due to the prolonged war in Iran, the US Consumer Price Index (CPI) rose 3.4% year-on-year last month, and the core CPI, excluding energy and food, rose 2.4%. The market had already anticipated the Fed's interest rate hike as US Treasury yields surged.

It is also noteworthy that the Fed's first interest rate adjustment since the inauguration of Fed Chairman Kevin Warsh, appointed by President Donald Trump, is an increase, not a decrease. President Trump has been calling for interest rate cuts ahead of the November midterm elections.