The Federal Reserve has increased the federal funds target range by 25 basis points to 3.75%-4.00%. This decision, reached on September 16, marks the first rate hike in three years and received unanimous support from all 12 voting members of the FOMC.
Major financial institutions anticipate further tightening. Goldman Sachs expects a 25 basis point increase at the upcoming meeting on October 27-28. Bank of America projects hikes at both the October and December sessions, which could bring the year-end rate to 4.25%-4.50%.
Market data suggests a 45%-53% probability of a rate increase in October. The likelihood of a hike at the December 8-9 meeting is estimated between 70% and 89%. Currently, 16 of 18 Fed officials expect at least one more rate increase before the end of 2026.
Fed Chair Kevin Warsh stated that the move addresses persistent inflation, which the central bank aims to keep at a 2% target. Factors such as supply chain disruptions and strong domestic demand continue to influence the committee's policy decisions.
