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Fed Hikes Rates 25 Basis Points to 4.00 Percent

By Markets Desk · 2026-09-16 · 1 min read
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Illustration: Tradingbird

The US Federal Reserve raised interest rates by 25 basis points on Wednesday. The new range sits between 3.75 and 4.00 percent. A majority of policymakers expect another hike before year-end.

The US Federal Reserve increased the federal funds rate by 25 basis points on Wednesday. The rate now stands in the range of 3.75 to 4.00 percent. The move aims to curb inflation that remains well above the 2 percent target.

The Federal Open Market Committee voted unanimously for the increase. Citing elevated prices, the bank stated the action supports a timely return to its inflation goal. This is the first rate hike since 2023.

Policymakers Expect Further Action

The Summary of Economic Projections indicates likely further tightening. Twelve of the eighteen participating policymakers expect at least one more hike by year-end. The Fed raised its PCE inflation forecast to 3.7 percent for the end of the year.

August consumer price data showed inflation at 3.4 percent. This figure is unchanged from the previous month but remains high. The bank also raised its GDP growth projection to 2.3 percent.

Political Tensions Rise

President Donald Trump has demanded lower rates to boost economic activity. The decision contradicts his public stance and may deepen political friction. The administration previously launched a criminal probe against former Fed Chair Jerome Powell.

Economic Drivers Cited

Inflation has persisted due to tariffs, energy shocks, and the AI boom. The Fed held rates steady in July while assessing these impacts. A quarter of voting members dissented in July, calling for an immediate hike. According to GN markets/policy (en-US), the central bank now acts to prevent inflation from becoming embedded in behavior.

Based on reporting by abc.net.au, compiled by the Tradingbird desk.

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