Fed Hikes Rates to 3.75-4%, Sees Three More Increases This Year

The Federal Reserve has lifted its target interest rate range to 3.75%, 4% in its first increase in three years, with a unanimous vote from policymakers.

This move is seen as removing some accommodation, implying that policy is not yet restrictive, according to the Fed's characterization.

Updated dot projections show that 16 of 18 policymakers anticipate another rate hike this year, while eight also expect a third increase in 2027.

The Fed's forecasts predict growth above potential, unemployment below equilibrium, and inflation above 2% through 2029.

In response to the Fed's decision, front-end yields rose by more than 7 basis points to their highest level since July 2024, while money markets are split on October but lean towards December for another rate hike.