US Fed hikes interest rates to 3.9%

The US Federal Reserve raises its benchmark interest rate by a quarter-point to about 3.9%, marking the Fed’s first rate hike since 2023

Fed Chair Kevin Warsh, appointed by President Donald Trump and taking over the post in May, said the rate-setting committee felt compelled to act because inflation has remained above the Fed's 2% target.

The increase will gradually raise borrowing costs for mortgages, auto loans, and credit cards, arriving just seven weeks before the midterm elections as Americans already struggle with the high costs of housing, gas, and groceries.

Warsh often suggested last year when under consideration by Trump that the Fed could reduce its key rate, echoing the president's call for lower borrowing costs.