What the Fed Rate Hike Means for You

For the first time in three years, the Federal Reserve raised interest rates — a quarter-point hike that makes borrowing more expensive across the American economy. The move, announced Wednesday and unanimous among Fed members, is the first major policy decision from new Fed Chairman Kevin Warsh, who took the opposite of what President Trump has been publicly demanding. Meanwhile, a new watchdog report found that the government's "fork in the road" program to pay federal workers to quit cost taxpayers $9.5 billion. And in St. Louis, doctors successfully separated two-year-old conjoined twins from Ethiopia who had never seen each other's faces.

The Fed's Rate Hike and What It Means

The quarter-point increase is the Fed's primary tool to fight inflation, which hit 3.4% in August compared to a year ago. The logic is straightforward: higher interest rates make it more expensive for businesses and consumers to borrow money, which slows spending across the economy, which should bring prices down. As Warsh put it at the news conference, "Our predominant focus is on the price stability side of our mandate."