The U.S. Federal Reserve raised its federal funds rate target range by 25 basis points to 3.75-4.00% at its meeting on September 16, marking the Fed’s first rate hike since 2023.
The Federal Open Market Committee (FOMC) approved the increase unanimously, following a prior meeting at which three members had dissented. The decision suggests Fed Chair Kevin Warsh built broader support on the committee for a firmer stance against inflation.
According to the Bureau of Labor Statistics’ August report, the unemployment rate stood at 4.1%, with employers adding an average of 80,000 jobs per month this year. By contrast, the University of Michigan’s preliminary September data showed year-ahead inflation expectations rising to 4.6%, while its consumer sentiment index fell 7.5% from August to September to 47.8, the second-lowest reading on record.
Market pricing indicates investors expect three additional rate hikes by mid-2027, with one more expected within 2026. Geopolitical tensions in the Middle East are seen as keeping inflation elevated through their effect on energy prices.
The September 16 FOMC decision and the resulting rate range, along with the fact that this was the first hike since 2023, were confirmed by the Federal Reserve's own statement and independent analysis from U.S. Bank, Kiplinger and Charles Schwab.
The 'unanimous' (12-0) vote figure appears in Charles Schwab's analysis, but this report does not directly verify the full FOMC membership count or a name-by-name vote breakdown; the number of additional hikes projected for 2027 also varies between sources (from 'one' to 'three'), which is expected given these are market expectations rather than a firm commitment.
The full text of the FOMC's official press statement and Chair Warsh's complete remarks from the post-meeting press conference are not directly quoted in this report.