WASHINGTON — The U.S. Federal Reserve raised its benchmark interest rate by 0.25 percentage point to a range of 3.75% to 4.00% in a unanimous vote, signaling it could deliver one more increase at the two remaining Federal Open Market Committee meetings this year.
In the dot plot released after the two-day FOMC meeting in Washington on the 16th, part of the Summary of Economic Projections, policymakers put the median federal funds rate at 4.1% for the end of this year. The dot plot is a quarterly chart that maps each official's rate projection as a single dot. That median is 0.3 percentage point higher than the 3.8% projected at the June FOMC meeting. Given that the Fed lifted the benchmark rate by 0.25 percentage point to 3.75% to 4.00% on the same day, officials effectively see room for one more increase at the October and December meetings.
It is the Fed's first rate increase in three years and two months, since July 2023. The central bank cut rates at three consecutive meetings from September through December last year, then held them steady at five straight meetings this year. In its statement, the Fed said economic uncertainty stemmed from geopolitical shifts, suggesting the increase reflected the impact of the war in Iran on global oil prices. The Fed added that job gains had kept pace with the growth in labor supply and the unemployment rate had changed little, while inflation remained elevated, and said the move would help bring inflation back to the 2% target in a timely manner.
