The Federal Reserve increased its benchmark interest rate by 25 basis points on September 16, 2026, marking the first hike since July 2023. The Federal Open Market Committee approved the decision with a 12-0 unanimous vote, setting the new target range at 3.75%–4.00%. This is the first rate adjustment under the leadership of Fed Chair Kevin Warsh.
Economic data shows a projected median PCE inflation of 3.7% for 2026, exceeding the 2% target. Policymakers indicated that at least one additional rate increase is likely before the end of the year, with a median projection of 4.1% for the federal funds rate heading into 2027.
Following the Fed's decision, JPMorgan and BNY Mellon raised their prime lending rates to 7%. Treasury yields for two-year notes reached 4.7%, while money market funds are currently priced near 4%. Corporate treasury teams are now negotiating pass-through rates with banks, with expectations ranging from 60% to 90%.
