Update: Fed Raises Interest Rates for First Time Since 2023

Full analysis

What's new since we last covered this: Fed rate hike occurred; Kevin Warsh as new Chair; actual rate now 3.75%–4%.

The Federal Reserve raised its benchmark interest rate by a quarter percentage point, bringing the target range to 3.75%–4%. It is the first rate hike under newly appointed Fed Chair Kevin Warsh and the first since 2023, driven by inflation that remains above the Fed's 2% target. For people carrying variable-rate debt — credit cards, auto loans, personal loans — borrowing costs will likely rise, making it harder to pay down existing balances. On the other side, savers may see better yields on savings accounts and CDs.

The Fed's dot plot, which shows where policymakers expect rates to go, suggests a majority of members anticipate at least one more quarter-point increase this year. Futures markets were pricing roughly a 42% chance of another hike at the October 27–28 meeting and about 53% odds of one at the December 8–9 meeting. For anyone approaching or already in retirement and managing a mix of savings, fixed-income investments, and any remaining debt, the direction of rates matters both for what debt costs and what safe savings earn.