Federal Reserve raises interest rates by 25 basis points

The U.S. Federal Reserve has raised interest rates by 25 basis points, bringing the target range to 3.75% to 4%. This decision, made under the leadership of Chair Kevin Warsh, received unanimous support from all 12 voting members of the Federal Open Market Committee. Warsh emphasized that the hike is necessary to combat persistent inflation and return it to the 2% target, noting that summer data has not yet shown a clear, rapid decline in underlying prices.

Following the announcement, markets reacted with a decline in gold and stock prices alongside a strengthening dollar. Warsh highlighted the resilience of the U.S. economy, citing strong private sector income, business investment, and a healthy labor market with unemployment around 4.1%.

In response to the economic move, Iranian Parliament Speaker Mohammad Bagher Ghalibaf utilized social media to mock the decision. Referencing the Taylor Rule, Ghalibaf questioned whether a 25-basis-point increase could manage strategic bottlenecks like the Strait of Hormuz, framing the economic measure against the backdrop of ongoing geopolitical tensions and regional maritime blockades.