Why the Federal Reserve is lifting rates now, and what it means

The Federal Reserve lifted its key rate, unanimously agreeing on a hike after weeks of keeping it steady, and the AP report traces the shift to two main forces: renewed geopolitical pressure raising fuel costs, and signs the economy is still growing despite stubborn inflation. The Fed’s previous stance treated energy-price shocks as possibly temporary, but with the Iran war in its seventh month, officials no longer expect the impact to fade quickly. The report notes gas prices at $4.44 a gallon Thursday, up 38 cents from a month earlier, and diesel at a record $6.40, which can increase shipping costs. While higher rates can eventually raise borrowing costs like mortgages, markets appeared reassured as the 10-year Treasury yield dipped.