Fed Hikes Rates to Support Inflation Goal Amid Geopolitical Uncertainty

The Federal Reserve's FOMC raised its federal funds target range to 3.75-4 percent, up from 3.5-3.75 percent. This decision was made in a statement approved by a 12-0 vote and released at 2:00 p.m. EDT on September 16, 2026.

The Committee said it acted to support the Federal Reserve's dual mandate and continue its policy of maintaining ample reserves in the banking system. The decision follows the Committee's July meeting, where it maintained the target range at 3.5-3.75 percent on a 9-3 vote.

The FOMC characterized economic activity as expanding at a solid pace, with productivity growth strong and capital investment robust. However, uncertainty remains elevated due to geopolitical developments, and inflation remains elevated. The Committee said the action 'will support a timelier return to the Committee's 2 percent goal,' adding that it will deliver price stability.

The Summary of Economic Projections released with the statement puts the median projection for real GDP growth at 2.3 percent in 2026, 2.4 percent in 2027, and 2.1 percent in 2029. The median unemployment rate projection is 4.1 percent for each year from 2026 through 2029.