Federal Reserve raises interest rates to 3.75-4 percent

The United States Federal Reserve (Fed) unanimously decided on September 16, 2026, to raise interest rates by 25 basis points, marking the first such increase since July 2023. The new target range for the federal funds rate is 3.75% to 4%. The decision was supported by the new Fed Chair, Kevin Warsh, and aims to combat persistent inflation, which the bank now predicts will reach 3.7% by the end of the year, with a return to the 2% target not expected until 2029.

President Donald Trump, who appointed Warsh with the expectation of lower rates, criticized the Fed as "hostile" and accused the board of acting for political reasons. The White House, via spokesperson Kush Desai, labeled the move as an unfortunate decision lacking persuasive economic justification. Despite this friction, the Fed maintains that aggressive monetary policy is necessary to stabilize the economy and address high inflation, with officials signaling that further rate hikes to 4-4.25% are likely before the end of the year.