From CNBC · Fred Imbert,Sean Conlon,Chloe Taylor · · 1m 10s
10-year Treasury yield hits 5% as Fed hikes rates
The Fed raised rates for the first time in three years as Chairman Warsh warned inflation remains stubbornly high.
In brief
The Fed raised rates for the first time in three years as Chairman Warsh warned inflation remains stubbornly high. The Fed hiked rates to 3.75%-4% and signaled more increases ahead as inflation stays elevated, pushing the 10-year Treasury yield above 5%. Originally reported by CNBC.
Treasury yield breaks 5% barrier
The 10-year Treasury note yield climbed above 5% after the Fed raised rates. The 2-year yield jumped more than 7 basis points to 4.738%.
Fed hikes for first time since 2023
The Fed raised its overnight lending rate to 3.75%-4%, up from 3.5%-3.75%. It's the first rate increase in three years.
“Inflation remains elevated. Today's policy action will support a timelier return to the Committee's 2 percent goal.”
Oil prices fuel inflation worries
A sharp rise in oil prices driven by the U.S.-Iran war has started appearing in recent inflation reports, including August's consumer price index.
Warsh warns inflation too stubborn
Fed Chairman Kevin Warsh told reporters that summer inflation readings show underlying trends haven't improved meaningfully.
“Inflation is too high and has been for too long.”
More rate hikes likely this year
Goldman Sachs expects one more rate hike in December, with the Fed likely skipping October due to proximity to midterm elections.
“The Fed has signaled it does not at this stage envisage an aggressive tightening cycle.”
The takeaway
The Fed hiked rates to 3.75%-4% and signaled more increases ahead as inflation stays elevated, pushing the 10-year Treasury yield above 5%.
