Fed Raises Interest Rates by 0.25% for First Time Since 2023
The Federal Reserve raised the federal funds target range by 25 basis points to 3.75%-4.00% on Wednesday, marking its first rate increase since 2023. In its policy statement, the Federal Open Market Committee said, "inflation remains elevated. Today's policy action will support a timelier return to the Committee's 2 percent goal. " The decision was unanimous. The updated dot plot showed the median official projecting a year-end 2026 fed funds rate of 4.1%, up from June's 3.8% and implying one additional hike by December. The 2027 median moved to 4.1% from 3.6% in June. Fed Chair Kevin Warsh is slated to hold the press conference at 2:30 p.m. ET. What September's Fed Projections Show The projections carried a hawkish edge well beyond this year. The 2027 median jumped to 4.1% from 3.6% in June, wiping out the rate cuts officials had penciled in for next year and implying the funds rate stays at its 2026 peak through the whole of 2027. The longer-run neutral estimate nudged up to 3.2% from 3.1%. The forecast revisions explain the shift. Officials marked their 2026 unemployment rate projection down to 4.1% from 4.3% in June and lifted this year's real GDP growth estimate to 2.3% from 2
00% on Wednesday, marking its first rate increase since 2023. In its policy statement, the Federal Open Market Committee said, "inflation remains elevated. Today's policy action will support a timelier return to the Committee's 2 percent goal. " The decision was unanimous.
8% and implying one additional hike by December. 6% in June. m. ET.
What September's Fed Projections Show The projections carried a hawkish edge well beyond this year. 6% in June, wiping out the rate cuts officials had penciled in for next year and implying the funds rate stays at its 2026 peak through the whole of 2027. 1%. The forecast revisions explain the shift.
3%. In short: a stronger labor market and firmer inflation, with the return to 2% pushed out to 2029 on the headline measure. 1 Source: Federal Reserve Summary of Economic Projections, Sept. 16, 2026.
Percent. How Markets Reacted To The Fed Decision The knee-jerk move was a sharp two-way whipsaw across every asset class. Rates repriced first. 642%, roughly 3 basis points above where it sat before the announcement.
Gold — tracked by the SPDR Gold Shares (NYSE: GLD ) — took the brunt of it. 25% and round-tripping the entire session's rally. S. 55.
Equities split along the same line they had traded all day. 90. 30. 8% to $76,031.
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