Fed raises rates for first time in nearly three years... with Americans warned MORE hikes could be coming

The Federal Reserve has raised interest rates for the first time in nearly three years as it intensifies its battle against stubbornly high inflation.The US central bank’s key rate-setting body - the Federal Open Markets Committee - voted to increase the federal funds target rate by one quarter of one percent to a range of 3.75 percent to 4.00 percent.This was the Fed's first rate hike since July 2023 - and it came as no surprise. This week, Wall Street traders were betting there was a nearly 95 percent probability the committee would deliver a rate increase today.'This hike was overwhelmingly expected by market participants, so the decision itself is not a surprise. The more important question is whether this is a one-off, or one of many,' former Goldman Sachs analyst Nic Puckrin told the Daily Mail.The decision on the committee was unanimous, meaning that new Fed chair Kevin Warsh and the rest of his colleagues were in complete agreement about the need to do something about inflation and re-establish the central bank's bonefides.President Donald Trump has frequently demanded that the Fed immediately cut interest rates, but Warsh has promised that under his leadership it will remain ‘strictly independent.’ US price increases are heating up, with consumer inflation running at 3.4 percent for the last several months and a separate measure of wholesale inflation surging as high as 5.4 percent last month.But the driver of inflation is crystal clear to anyone who’s paying attention: The conflict in the Middle East is only getting worse, and crude oil prices are climbing back above $100 for the first time since May.'The plain fact is that inflation is too high and has been for too long,' Warsh said in his post-meeting press conference. Today's decision was unanimous - Fed chair Kevin Warsh and the rest of his colleagues were in complete agreement about the need to do something about inflation President Donald Trump has frequently demanded that the Fed immediately cut interest rates, but Warsh has promised that under his leadership it will remain ‘strictly independent’According to AAA, the national average gasoline price is around $4.37 per gallon, with average prices well above $5.00 in many western states. Meanwhile, average US diesel prices have notched an all-time record high of $6.27 per gallon.With the conflict threatening to spread amid attacks on Saudi Arabia and no clear path toward a resolution between the US and Iran, fear what higher energy costs could mean for American consumers. ‘For now, inflation remains the Fed’s primary concern,’ LoanDepot head economist Jeff DerGurahian told the Daily Mail. ‘Unless the labor market weakens more meaningfully, such as through a sustained increase in jobless claims, employment data is unlikely to pull the Fed’s attention away from prices.’Now begins the guessing game of how many interest rate hikes it will take to finally suppress inflation.'A single rate cut is not going to placate the bond market, as we see multiple meetings pricing higher than 50 percent probability for hikes currently,' Byron Anderson, head of fixed income at Laffer Tengler Investments, told the Daily Mail.Anderson emphasized that since Warsh has gotten rid of forward-looking guidance, there is a great deal of risk and uncertainty surrounding what the central bank might do next.'Fed Chair Warsh came out of the gate pushing to establish his credibility - and now he’s painted himself into a corner where really the only way to regain credibility is not one hike or a series of hikes, but to remove the market’s inflation worries,' said Christian Hoffmann, head of fixed income at Thornburg Investment Management.And that suggest we are at the very beginning of what could be a long period of higher interest rates. In materials released with the decision, 16 out of 18 top Fed officials indicated they expect at least one more rate hikes this year, while four see two more rate hikes.'Another hike is now the base case, with a further move possible if inflation remains stubborn,' eToro global market strategist Lale Akoner told the Daily Mail.Consumers will feel the impact through higher credit card and auto loan costs, potentially within months.