Federal Reserve to raise interest rates in September; Waller says strong economy and high inflation drive decision

The Federal Reserve raised interest rates as expected in September, after keeping rates unchanged at its July meeting. Federal Reserve Chair Walsh stated that three things changed between the two meetings. He said that data released in recent weeks showed strong performance of the US economy, especially in the labor market. Meanwhile, the inflation rate remained at a high level throughout the summer, significantly above the Federal Reserve’s year-on-year inflation target of 2%. Lastly, he noted that geopolitical factors also prompted the Federal Reserve to change its assessment of the economic outlook, though he did not directly mention the US-Iran conflict in the Middle East. Walsh said: “These three things all contributed to our firm and unanimous decision today.”