WASHINGTON — The Federal Reserve raised its benchmark interest rate by a quarter percentage point on Wednesday, September 16, 2026, marking the first increase since July 2023.
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The Federal Open Market Committee voted unanimously 12-0 to lift the federal funds rate to a new target range of 3.75 percent to 4 percent. The move aims to bring elevated inflation closer to the central bank’s 2 percent goal.
"The plain fact is that inflation is too high and has been for too long," Fed Chairman Kevin Warsh said during the post-meeting press conference. He noted that economic activity continues to expand at a solid pace while uncertainty remains elevated partly due to geopolitical developments.
Updated economic projections released alongside the decision showed that a strong majority of officials expect at least one more rate increase before the end of the year. Inflation, as measured by the Personal Consumption Expenditures price index, is now projected to end 2026 at 3.7 percent.
Chairman Warsh answers reporters' questions at the FOMC press conference on September 16, 2026. https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm
— Federal Reserve (@federalreserve) September 16, 2026
The decision comes as President Donald Trump has repeatedly pressed the central bank to lower rates. Warsh, appointed earlier this year by Trump, has emphasized the Fed’s independence in pursuing its dual mandate of maximum employment and stable prices.
Markets had largely anticipated the quarter-point move. The rate hike reverses one of the three cuts made in 2025 and reflects ongoing concerns about inflation pressures linked in part to higher energy costs from the ongoing conflict with Iran.
Reporting based on the Federal Reserve’s official FOMC statement and press conference materials released September 16, 2026.
