@cnn: The Federal Reserve raised its benchmark interest rate as expected on Wednesday, marking a sharp policy turnaround for an economy increasingly shaped by the war in the Middle East. This is the first rate hike since 2023 and is designed to cool spending and prevent inflation from becoming more entrenched. But it also means higher borrowing costs for Americans already struggling to afford homes, cars and other big-ticket purchases. Raising rates could weaken an economy that is already showing signs of strain, increasing the risk that the Fed's inflation fight could come at the expense of economic growth. The decision to raise rates was unanimous among the Fed's rate-setting committee, including Chairman Kevin Warsh, who was handpicked by President Donald Trump with the aim of lowering rates. 📸: Alex Wong/Getty Images