US Federal Reserve Raises Interest Rates by 25 Basis Points to 3.75‑4%
The Federal Open Market Committee increased the policy rate by 25 basis points to a target range of 3.75‑4% on September 15‑16, the first hike since July 2023.
In Brief
- •The Federal Open Market Committee increased the policy rate by 25 basis points to a target range of 3.75‑4% on September 15‑16, the first hike since July 2023.
- •The vote was unanimous, 12‑0, underscoring the committee’s resolve to curb inflation.
- •Fed projections now forecast 2.3% GDP growth and 3.7% inflation for 2026, with unemployment at 4.1% for both 2026 and 2027.
- •Market reactions included a drop in major U.S. equity indices, a 2‑basis‑point rise in the 10‑year Treasury yield to 5.012%, a 0.5‑basis‑point fall in the 30‑year yield to 5.357%, and a 0.6% rise in the U.S. dollar index to 100.3.
Why It Matters
The rate hike signals the Fed’s continued effort to bring inflation back toward its 2% target, affecting borrowing costs for consumers and businesses. Higher rates can slow economic activity, influence corporate investment decisions, and impact global financial markets as investors adjust expectations for U.S. growth and monetary policy. The unanimous decision and updated projections suggest that the Fed may keep tightening if inflation remains elevated, which could further tighten credit conditions and affect asset valuations across the economy.
Key Details
- Policy Rate Target
- 3.75‑4%
- Rate Hike
- 25 basis points
- FOMC Vote
- 12‑0 unanimous
- Projected GDP 2026
- 2.3%
- Projected Inflation 2026
- 3.7%
- Projected Unemployment 2026
- 4.1%
Context & Background
The Federal Reserve has been raising rates since 2023 to combat persistent inflation, with the latest hike marking the first increase in over a year.
Original Reporting & Sources
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