The Federal Reserve, led by Chair Kevin Warsh, raised its benchmark interest rate by 25 basis points to a range of 3.75% to 4% on September 16, marking its first rate increase since 2023. This decision comes as the personal savings rate dropped to 2.6% in April 2026, its lowest level since 2022, while inflation remains well above the Fed’s 2% target, with CPI at 3.4% and PCE at approximately 3.7%. Warsh warned that the economic distortions caused by years of above-target inflation would trigger « a reckoning. » High-yield savings accounts now offer around 4.1% APY, but the rate hike also makes mortgages, auto loans, and credit card balances more expensive, potentially weighing on consumer spending which accounts for nearly two-thirds of US GDP.
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