Key facts
- The Federal Reserve raised its benchmark interest rate by 0.25 percentage point to 3.75-4.00%.
- This is the first rate hike by the Fed since July 2023.
- KeyCorp raised its prime lending rate to 7% from 6.75%.
- 16 of 18 Federal Reserve policymakers anticipate at least one more quarter-percentage-point hike by year-end.
The U.S. Federal Reserve increased its benchmark interest rate by a quarter percentage point to the 3.75–4.00 percent range on Wednesday, marking the first hike since July 2023. The decision was made by a unanimous 12-0 vote of the Federal Open Market Committee (FOMC). Following the Fed's move, KeyCorp raised its prime lending rate to 7% from 6.75%, effective Thursday. The prime rate typically follows the federal funds rate and is used by U.S. banks as a reference for setting rates on financial products like credit cards and personal loans. The Fed's action aims to address persistent inflation, with recent data showing the core consumer price index rose by 0.3 percent last month. The dollar rose against a basket of currencies after the Federal Reserve raised interest rates and flagged further increases in borrowing costs. New policy projections showed 16 of 18 policymakers anticipate at least one more quarter-percentage-point hike by the end of this year.