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The Federal Open Market Committee raised the federal funds rate by a quarter of a percentage point on Wednesday, moving the benchmark to a range of 3.75% to 4%.
This is the central bank's first rate increase in three years, a decision aimed at curbing inflation that remains above its 2% target.
The timing is particularly sensitive for President Donald Trump, who has campaigned on improving affordability and lowering borrowing costs with less than two months remaining before the midterm elections determine which party controls Congress.
While the Fed does not set the prices of groceries, cars, or homes, its monetary policy directly influences the cost of borrowing.
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