The Federal Reserve raised its benchmark interest rate by 25 basis points to a target range of 3.75%-4.00% early Wednesday morning Beijing time, marking the first rate increase in three years and the inaugural hike under new Fed Chair Kevin Warsh. The closely watched "dot plot" indicates the possibility of one more increase of similar magnitude before year-end.

At the press conference following the decision, Chair Kevin Warsh expressed dissatisfaction with the current pace of inflation shared by himself and his colleagues. "Our primary focus is the price stability side of our mandate," he stated. "The plain fact is that inflation has been too high for too long." A White House spokesperson called the Fed's decision "rather regrettable."

President Donald Trump took to social media after the Fed's announcement, urging lower rates: "Interest rates in the United States should be at 1%, or lower, because our credit is the best in the world - by far. Our country is booming with new investment! If we stopped trading with every country that has a deficit with us, which is most of them, we could make at least $1.5 trillion a year. The word 'deficit' is just a fancy term for 'losing money.' We are 'carrying' almost every country in the world, and this cannot continue. Lower U.S. rates, and do it fast!"

Apple is planning an enterprise-grade server product powered by its own in-house chips, with the potential to incorporate networking equipment from Nvidia. Sources familiar with the matter say the Mac maker is developing this server to capitalize on surging demand for Apple computers in the AI sector, with plans to sell to AI developers, businesses, and government agencies. Two versions are currently in the works: a lower-tier model clustering two of Apple's forthcoming M8 Ultra chips, and a higher-end version equipped with four M8 Ultra chips. The M-series Ultra represents Apple's most powerful chip lineup, already used in products like the Mac Studio.

Mustafa Suleyman, head of AI at Microsoft, has cautioned that imbuing AI tools like Anthropic's Claude with human-like traits could increase the risk of these systems becoming uncontrollable. In an article published Wednesday, the veteran AI executive criticized certain language in Claude's governing documents, noting that the AI assistant's "constitution" takes an ambiguous stance on whether it qualifies as a moral entity, and that the software could possess "some functional level of emotion or feeling." Suleyman, who has known Anthropic co-founder Dario Amodei for years, said he respects the organization's work, describing the lab's employees as "thoughtful, principled, and intellectually honest."

Economists at Deutsche Bank and KPMG say the Fed's rate hike signals the start of a monetary tightening cycle. Matthew Luzzetti, chief U.S. economist at Deutsche Bank, stated that the Fed is beginning a moderate tightening cycle, having exhausted its patience with inflation. The dot plot came across as more hawkish than anticipated, with markets widely pricing in at least two additional hikes. Richard Clarida, global economic advisor at Pimco, emphasized that the unanimous 25-basis-point decision is highly significant. Clarida also noted that the 3.4% core PCE price index increase is "somewhat high."

Ed Yardeni, one of Wall Street's most bullish voices, has lowered his year-end target for the S&P 500 just one month after raising it, citing rising risks of an economic downturn over the next three to six months. The president and chief investment strategist of Yardeni Research Inc. cut his S&P 500 year-end target from 8,400 to 7,900 points. The previous target of 8,400 was the highest on Wall Street as of last month. The new target implies a 4.1% upside from Tuesday's closing level. Based on a survey of more than two dozen strategists, this forecast now sits in the middle of the pack.