Fed Interest Rate Rises to 3.75 to 4 Percent, First Hike Since 2023

The US Federal Reserve raised its target interest rate by 25 basis points to a range of 3.75 to 4 percent in a unanimous vote at the end of its two day Federal Open Market Committee (FOMC) meeting, concluded on Wednesday, September 16, 2026. It was the Fed's first rate hike since July 2023 and the first under Chair Kevin Warsh. The Fed cited elevated August core inflation and rising energy prices linked to military tensions in the Middle East as the main reasons for the move.

New committee projections show 16 of 18 Fed officials expect at least one more rate increase by the end of 2026, with the median forecast putting the year end rate at 4 to 4.25 percent. The Fed also pushed back its forecast for inflation returning to the 2 percent target to 2029 and raised its 2026 inflation forecast to 3.7 percent.

Markets reacted immediately: the two year Treasury yield rose to about 4.71 percent and the ten year yield climbed back above 5 percent. The S&P 500 and Nasdaq fell as much as 1.3 and 1.4 percent respectively in early trading before paring some losses. Global gold prices dropped more than 2 percent to around 4,260 dollars an ounce following the decision.