The U.S. stock market lost roughly $490 billion in value within 25 minutes after the Federal Reserve raised interest rates by 25 basis points, lifting the federal funds target range to 3.75%-4.00%. The move marked the Fed’s first rate increase since 2023 and triggered an immediate risk-off reaction across equities.
Additional pressure came from Fed Chair Kevin Warsh’s warning that inflation remains elevated, reinforcing expectations that monetary tightening may not be over. Policymakers’ latest projections indicate that additional rate increases could follow as the central bank seeks to return inflation toward its 2% target.
Stocks remained under pressure as Treasury yields climbed following the decision. The market reaction highlights investors’ sensitivity not only to the rate increase itself, but also to the possibility that borrowing costs could remain higher for longer.
