Fed hikes rates, sees more tightening in search of 'timelier' drop in inflation

According to Business Recorder, the US Federal Reserve lifted its key overnight lending rate by a quarter point on Wednesday, taking it to a 3.75%-4.00% band. The vote was unanimous, and new Fed chief Kevin Warsh backed the hike, which came with signals of more increases in borrowing costs in the months ahead. The decision effectively concedes that inflation has so far resisted the administration's efforts, despite Donald Trump's pledge to lower prices while in office.

The new projections show 16 of 18 policymakers expecting at least one more quarter-point increase by year-end, with only two expecting rates to stay unchanged. The policy rate is projected to reach 4.00%-4.25% by year-end and stay there through 2027. Inflation, measured by the PCE price index, is now projected at 3.7% this year, up from 3.6% in June, and the central bank expects it to take until 2029 to get back to the 2% goal.

Warsh's press conference at 2:30 p.m. EDT will guide how markets read the decision, since long-term US Treasury yields have been climbing. The hike comes less than two months before midterm elections, and gasoline costs are roughly a third above last year's level, with the average 30-year fixed mortgage rate approaching 7%.