Economy News

Fed raises rates for the first time since 2023, to 3.75–4%, as Gulf central banks follow

The US Federal Reserve raised interest rates on Wednesday 16 September for the first time since July 2023, lifting its benchmark range by a quarter point to 3.75%–4%, The Guardian reports. The vote was unanimous. A majority of officials pencilled in another hike before year end, and four expect rates to reach 4.25%–4.5%; officials see inflation taking until roughly 2029 to return to 2%.

“The plain fact is that inflation is too high and has been for too long.” — Kevin Warsh, via The Guardian

Donald Trump responded on Truth Social that rates “should be 1%, or less”. Al Jazeera notes that CME FedWatch put the odds of the hike at 92.3%, from 40% a week earlier, after August consumer prices rose 0.4% on the month. Brent hovered near $109, diesel hit a record $6.31 a gallon, and the 10-year Treasury yield reached 5.02%, a 19-year high.

How each outlet framed it

• The Guardian — Warsh on a collision course with Trump, weeks before the midterms, with real hourly earnings down 0.1% on a year earlier.
• Al Jazeera — the fuel shock behind the move; Tufts professor Michael Klein said the hike was largely priced in.
• Arab News (AFP) — a decision that defied Trump; the White House called it “rather unfortunate”.
• Arab News — the knock-on in the Gulf: Saudi Arabia, the UAE, Qatar, Oman and Bahrain all raised rates by 25 basis points to protect their dollar pegs; Kuwait, pegged to a basket, held.

What we don't know yet: where Warsh himself expects rates to go. Arab News reports that only 18 officials took part in the projections, suggesting he again withheld his own forecast.