Fed Raises Rates for First Time Since July as Markets Anticipate Aggressive Path

The Federal Reserve raised interest rates for the first time since July 2023 at its September meeting, increasing the target range for the federal funds rate by 25 basis points.

This decision comes as markets anticipated a hike heading into the meeting, making it less significant than what policymakers signal about what's to come.

The Fed does not view this as the start of an extended hiking cycle, but rather as supporting a 'timelier' return to its 2% inflation goal. The path from here will depend largely on the evolution of underlying inflation.

While Chair Warsh provided little explicit forward guidance, updated projections offer some insight into how other FOMC participants see the path ahead. The median projection points to one additional 25-basis-point hike by year-end, followed by no further increase in 2027, although there remains meaningful dispersion among individual participants.