The Federal Reserve has increased the federal funds rate by 25 basis points, establishing a new target range of 3.75%-4%. The decision was made during the FOMC meeting on September 16, 2026, and marks the first rate hike since July 2023.
The vote was unanimous, representing a shift from the July meeting where three FOMC members dissented. Kevin Warsh, who became Fed Chair in 2026, faced pressure to address inflation that has remained above the 2% target due to geopolitical issues and tariffs.
Jane Foley, Head of FX Strategy at Rabobank, noted that the hike was necessary for Warsh to establish institutional credibility. Analysts at Rabobank currently project one more rate increase before the end of 2026, followed by a pause throughout 2027.
