TLDR
- The Fed raised its benchmark interest rate by 25 basis points to a target range of 3.75%-4%, its first hike since July 2023
- The vote was unanimous across all 12 FOMC members
- Fed Chair Kevin Warsh said inflation has been “too high for too long”
- Updated projections show 16 of 18 officials expect at least one more rate hike in 2026
- Bitcoin held relatively steady around $75,700 after the announcement, while the S&P 500 rose
The Federal Reserve raised its key interest rate by a quarter percentage point on Wednesday, marking its first rate hike in more than three years. The move was widely expected by markets, which had priced in a better than 90% chance of an increase.
SUMMARY OF FED DECISION (9/16/2026):
1. Fed hikes interest rates by 25 bps for first time since July 2023
2. The decision was made in a 12-0 unanimous vote
3. Fed says the decision will support a "timelier" return to 2% inflation
4. Median Fed forecast shows one more 25 basis…
— The Kobeissi Letter (@KobeissiLetter) September 16, 2026
The federal funds rate now sits at a target range of 3.75% to 4%. The decision was unanimous, with all 12 FOMC members voting in favor.
Fed Chair Kevin Warsh said at a press conference that inflation has been “too high for too long.” He said the committee needed to be confident that inflation was moving toward its 2% target “clearly and at sufficient speed.”
Warsh pointed to three factors behind the decision: a strong labor market, elevated inflation, and tensions in the Middle East. He said all three supported a firm, unanimous decision.
More Hikes Could Be Coming
Updated economic projections released Wednesday showed that 16 of 18 Fed officials expect at least one more rate hike this year. Four of those officials see two more hikes as possible. Only two expect the committee to stop at this one increase.
🚨BREAKING: The Fed RAISED interest rates by 25 bps to 3.75%–4%, with a forecast of another 25 bps by year end.
This is the Fed's FIRST hike since July 2023.
The decision was unanimous, with a 12–0 vote.
• 12 of 18 officials see one more hike this year, taking rates to… pic.twitter.com/lonQntgoCE
— Coin Bureau (@coinbureau) September 16, 2026
No rate hikes are projected for future years, with one cut expected in 2028 and at least one in 2029.
The Fed lifted its inflation forecasts slightly. Officials now see headline personal consumption expenditures at 3.7% and core PCE at 3.4%, both up 0.1 percentage point from June. The Fed does not expect to hit its 2% inflation target until 2029.
The committee had been on hold all year before the shift toward a hike began in late August, following comments from Warsh at the Jackson Hole symposium.
Markets React
The S&P 500 rose following the announcement. Treasury yields fell after the decision, a sign that investors were encouraged by the Fed’s action on inflation.
Mortgage rates have already been climbing. A 30-year fixed-rate mortgage reached 7.19%, up about 38 basis points since the Jackson Hole speech and more than a full percentage point from a year ago.
Bitcoin was little changed after the announcement, trading at around $75,700. The crypto market’s muted reaction suggested traders had already priced in the hike.
The Fed’s concern is that prolonged high energy prices, driven in part by the Iran war, could push inflation expectations higher across the economy. Officials also flagged expanded investment in artificial intelligence as a potential new inflationary factor.
The “transitory” inflation episode during the Covid era remains a reference point for policymakers. Inflation hit 40-year highs before the Fed moved aggressively to bring it down.
Policymakers are now watching to see whether this hike, and the possibility of another, will be enough to bring inflation back to target without stalling economic growth.
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