The U.S. Federal Reserve increased its benchmark interest rate by 25 basis points. The new target range stands at 3.75% to 4.00%. This decision marks the first rate hike since July 2023.
The central bank adopted a hawkish stance to combat persistent inflation fueled by rising energy costs. Fed funds futures showed a 90% probability of the move prior to the announcement. Markets had almost fully priced in the rate increase.
A stronger U.S. dollar pressured copper prices by making the metal more expensive for foreign buyers. Higher interest rates also increased borrowing costs for industrial projects. Copper prices remained stable following the announcement after a slight pre-decision rebound.
Investors are now monitoring the Fed’s updated economic projections for future tightening signals. The market focus has shifted to forward-looking guidance and the central bank's outlook on the economy.