US government borrowing costs surged to their highest levels since 2007 on Wednesday after the Federal Reserve held its benchmark rate steady, with the 30-year Treasury yield climbing 14 basis points to nearly 5.24%.
The decision to maintain rates at 3.50%–3.75% for a fifth consecutive meeting was not unanimous, with three officials — Beth Hammack, Neel Kashkari and Lorie Logan — dissenting in favour of a quarter-point increase. Chair Kevin Warsh said the bank would "not waver" in its commitment to tackling rising prices. The hold came as second-quarter GDP grew just 1.5%, missing expectations of 2.0%.
Equities sold off, with the S&P 500 closing down 1.5%, the Dow Jones falling 2.2% and the Nasdaq dropping 1.7%. Meanwhile, the Bank of England also held its rate at 3.75% but warned that an escalation in the Iran conflict could push inflation above 4% next year.