US Federal Reserve Raises Fed Funds Rate Target Range to 3.75%-4.00%

The US Federal Reserve (the Fed) has raised the target range for the federal funds rate to 3.75%-4.00%, increasing it by 0.25 percentage points. The Federal Open Market Committee (FOMC) unanimously approved this decision with a vote of 12-0.

The Fed stated that this move supports its dual mandate and will continue maintaining sufficient reserves in the banking system. It assessed that economic activity is expanding at a solid pace, with domestic spending showing resilience despite ongoing geopolitical uncertainties. Productivity growth remains strong, capital investment is steady, and job gains align with labor force expansion, with little change in unemployment rates.

The Fed noted inflation remains elevated and emphasized that this policy action will help bring the inflation rate more appropriately toward its 2% target. The committee reaffirmed its commitment to achieving price stability.