Fed Set to Raise Rates for 1st Time Since 2023

2026-09-16 06:38 By Joana Taborda 1 min. read

The Federal Reserve is expected to raise the target range for the federal funds rate by 25bps to 3.75%-4.00% in September 2026, marking the first rate hike since 2023, as inflation remains well above target and the energy shock stemming from the war with Iran continues to weigh on the outlook.

US headline inflation held at 3.4% year-on-year in August, while core inflation was at 2.4%.

Meanwhile, diesel prices have risen to $6 a gallon, adding further pressure to the inflation outlook as an end to the conflict appears increasingly distant.

In his Jackson Hole speech last month, Chair Warsh said that if the Fed was not confident that underlying inflation was declining, it would have “work to do”.

Policymakers will also release updated economic projections.

In June, the so-called dot plot showed that nine officials expected at least one rate hike this year, while six anticipated at least two.

Chair Warsh did not submit a forecast at the time.



News Stream
Fed Set to Raise Rates for 1st Time Since 2023
The Federal Reserve is expected to raise the target range for the federal funds rate by 25bps to 3.75%-4.00% in September 2026, marking the first rate hike since 2023, as inflation remains well above target and the energy shock stemming from the war with Iran continues to weigh on the outlook. US headline inflation held at 3.4% year-on-year in August, while core inflation was at 2.4%. Meanwhile, diesel prices have risen to $6 a gallon, adding further pressure to the inflation outlook as an end to the conflict appears increasingly distant. In his Jackson Hole speech last month, Chair Warsh said that if the Fed was not confident that underlying inflation was declining, it would have “work to do”. Policymakers will also release updated economic projections. In June, the so-called dot plot showed that nine officials expected at least one rate hike this year, while six anticipated at least two. Chair Warsh did not submit a forecast at the time.
2026-09-16
Fed Chair Warsh Flags Inflation Risks
Federal Reserve Chairman Kevin Warsh flagged that underlying inflation is not slowing, during his speech at the Jackson Hole Economic Symposium. The Chairman reiterated that the PCE price index remains the gauge to be targeted, clarifying doubts from market participants after he downplayed a strict inflation gauge and opted for a more flexible model touted by one of the task forces he created. The Federal Reserve left the federal funds rate unchanged at 3.50%–3.75% for a fifth consecutive meeting in July 2026, in line with expectations, despite markets assigning roughly a one-in-three probability to a rate hike. Three FOMC members dissented for a rate hike. After the decision, Chairman Warsh downplayed the funds rate as the preferred tool to fight inflationary risks in favor of a smaller Fed balance sheet, and continued to criticize forward guidance.
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Fed Minutes Show Inflation Risks and Rate Hike Concerns
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