The Federal Reserve on Sept. 16 raised its benchmark interest rate by a quarter percentage point to 3.75%-4%, marking the central bank’s first rate increase since July 2023.

The Federal Open Market Committee approved the increase in a unanimous 12-0 vote. The move follows a period in which the Fed had cut rates and then held them steady. At its July meeting, the committee voted 9-3 to leave rates unchanged, with three members favoring a quarter-point increase.

In its Sept. 16 statement, the Fed said economic activity is expanding at a “solid pace,” while domestic spending has remained resilient. Policymakers also cited strong productivity growth and robust capital investment, while job gains have kept pace with workforce growth and the unemployment rate has changed little.

Inflation remains elevated, the Fed said, adding that the rate increase is intended to support a more timely return to its 2% inflation goal.