Fed Hikes Interest Rates Amid Inflation Concerns

The Federal Reserve raised its benchmark interest rate by one-quarter of a percentage point on Wednesday, September 16, 2026. The unanimous 12-0 decision lifted the federal funds rate to a range of 3.75% to 4%. This is the first increase since 2023.

The decision was made despite President Donald Trump's calls for lower borrowing costs. Fed Chair Kevin Warsh said that the Committee decided to raise the target range for the federal funds rate by 1/4 percentage point to 3-3/4 to 4 percent, in support of the Federal Reserve's dual mandate.

The economy is expanding at a solid pace, with job gains keeping pace with the workforce and the unemployment rate remaining unchanged. However, inflation remains elevated, and the Fed hopes that this increase will help return inflation to its 2% goal sooner rather than later.