Fed raises rates 25 basis points to 3.75%-4%, its first hike since 2023

The Federal Reserve raised the federal funds target range by 25 basis points to 3.75%-4% on September 16, 2026, its first increase since 2023. The FOMC statement itself is restrained: it says inflation remains elevated and describes the economy as expanding at a solid pace.

The framing that has travelled furthest since the decision is not the Fed's. The description of a "new world" of sticky inflation alongside faster growth comes from wire coverage of the meeting rather than from any Fed official, and the distinction is worth holding onto, because it is the difference between what the committee said and how the decision was read.

The inflation data underneath is more mixed than a hike implies. On the August CPI, core inflation ran at 2.4% year over year, the lowest reading since March 2021, and the headline year-over-year print matched estimates. The one genuinely firm component was core on a monthly basis at 0.3%, against an estimate closer to 0.2%. A single in-line print with a soft core annual rate is thin ground for calling inflation entrenched.

What to watch from here is whether this was a one-off adjustment or the start of a sequence. The signals that would settle it are the next core monthly prints, the committee's own projections for the funds rate, and whether officials adopt the sticky-inflation language themselves rather than leaving it to their coverage. Borrowing costs, the front end of the curve, and rate-sensitive equities all key off that question rather than off this single move.