Overview
- The Federal Open Market Committee voted unanimously on Wednesday, Sept. 16 to raise the federal funds target range by 25 basis points to 3.75%–4.00%, the first hike since 2023.
- Fed Chair Kevin Warsh said inflation has been "too high" and the Fed’s updated projections show most officials expect at least one more increase this year and do not see a return to 2% inflation before 2029.
- Markets reacted quickly with a stronger dollar, higher Treasury yields, and falling stock indexes, and mortgage rates and housing financing costs rose as lenders priced in tighter monetary conditions.
- Policymakers pointed to higher energy prices linked to the Middle East conflict and strong AI-driven capital spending as key forces keeping inflation elevated and pushing long-term yields up.
- The decision has drawn criticism from the White House and President Trump and spurred similar tightening signals from other central banks, creating global spillovers that could raise borrowing costs for households and governments.