Arab Finance: The US Federal Reserve has decided to raise its benchmark interest rate by 25 basis points to a target range of 3.75% to 4%, marking its first increase since 2023.

The Federal Open Market Committee (FOMC) approved the decision unanimously, affirming that it would continue its policy of maintaining ample reserves in the banking system.

The Fed said economic activity is expanding at a solid pace, backed by resilient domestic spending, strong productivity growth, and robust capital investment. Job gains have kept pace with the workforce, while the unemployment rate has changed little.

However, inflation remains elevated, while economic uncertainty remains high, partly due to geopolitical tensions in the Middle East.

Meanwhile, the Fed indicated the latest policy action is intended to support a timelier return of inflation to its 2% target and reaffirmed its commitment to achieving price stability.

For his part, Federal Reserve Chairman Kevin Warsh commented: “The plain fact is that inflation is too high and has been for too long.”

“We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed,” Warsh noted. “Today, the FOMC decided that this standard has not been satisfied.”