Overview
- The Fed unanimously raised its federal funds target by 25 basis points to a 3.75–4.00% range and indicated it expects another quarter-point hike later in the year, with chair Kevin Warsh stressing price stability.
- Markets reacted with a sharp but short-lived sell-off in equities and a drop in oil prices after reports that Saudi Aramco may reopen part of an east–west pipeline shut by a drone attack.
- Investors staged a rebound the next trading day as bond markets calmed, the S&P 500 and Nasdaq recovered gains, and the yield on the 10-year Treasury fell back below 5 percent.
- The White House called the decision unfortunate in remarks reflecting President Trump’s public preference for lower rates and highlighting friction between the Fed’s inflation push and political pressure.
- The move is the Fed’s first rate increase since July 2023 and the first under chair Kevin Warsh, and it comes as U.S. inflation remains above target with energy-price shocks from the Middle East feeding price pressures.