From ABC News · ABC News · · 1m 40s
Fed raises rates to fight Iran war inflation surge
The central bank hikes rates for the first time since 2023 as oil prices soar and gas tops $4.30 a gallon.
In brief
The central bank hikes rates for the first time since 2023 as oil prices soar and gas tops $4.30 a gallon. The Federal Reserve raised interest rates a quarter point to combat inflation driven by the Iran war's impact on global oil supplies. Originally reported by ABC News.
Fed hikes rates again
The Federal Reserve raised interest rates a quarter point on Wednesday, the first increase since July 2023. Rates now sit between 3.75% and 4%.
Iran war drives inflation
The rate hike targets inflation sparked by the Iran conflict. Global oil prices hover near a four-month high and gas averages over $4.30 per gallon.
Rare dissent at July meeting
The Fed held rates steady in July, but three of 12 board members voted for a hike. That was the most dissenters voting the same way in a decade.
Warsh prioritizes price control
Fed Chair Kevin Warsh, who took over in May, has pledged to tackle persistent inflation. Prices rose 3.4% in August, well above the Fed's 2% target.
“The Fed's predominant focus right now should be on prices”
Economy shows mixed signals
Despite inflation concerns, employers added 162,000 jobs in August. The economy grew through June, defying fears of a war-triggered downturn.
Oil supply crunch intensifies
Crude prices hit $105 a barrel, up 50% since the war began in late February. Iran's near-closure of the Strait of Hormuz choked off one-fifth of global supply.
Saudi shutdown worsens crisis
Saudi Arabia shut down a key pipeline bypassing the strait over the weekend. The move further constrained oil delivery and pushed prices higher.
The bottom line
The Federal Reserve raised interest rates a quarter point to combat inflation driven by the Iran war's impact on global oil supplies.
