The Fed Just Raised Rates for the First Time in Three Years and Warns Another Hike Is Coming

The Federal Reserve raised the federal funds target range by 25 basis points to 3.75%-4.00%, the first hike since July 2023. The 16 September 2026 FOMC statement followed a unanimous 12-0 vote. CNBC reported the move as the first increase in three years.

The committee said inflation remains elevated and that the action will support a timelier return to the 2 percent goal. Chair Kevin Warsh said inflation has been too high for too long. He tied the unanimous vote to a strong labor market, inflation still above target, and tension in the Middle East, the same energy shock already showing up in Saudi crude shipments to Europe halted and UK inflation at 3.1 percent on a fuel shock.

In July, three FOMC members voted against a hold and preferred a quarter-point hike. On 16 September the committee was unanimous.

CNBC said a strong majority of SEP participants still see another hike this year. Officials nudged 2026 PCE to 3.7 percent headline and 3.4 percent core. In those projections, inflation does not return to 2 percent until 2029.