Fed Launches Rate-Hiking Cycle With 25-Basis-Point Increase to 3.75%-4.00%

The Federal Reserve initiated a new interest rate-hiking cycle, raising the federal funds target range by 25 basis points to 3.75%-4.00% in a unanimous 12-0 decision. Chair Kevin Warsh signaled potential additional tightening, noting the central bank removed accommodation to counter persistent inflation. The CME FedWatch tool shows a 53% probability of another hike in October, with dot plot projections pointing to no rate cuts until at least 2028. The tightening move has weighed on digital assets, while elevated borrowing costs threaten debt-financed artificial intelligence infrastructure spending and broader market liquidity.