Fed Raises Rates for First Time Since 2023 Amid Inflation, Geopolitics, and Presidential Tension

On September 16 2026 the Federal Open Market Committee voted 12-0 to lift the federal funds target range by a quarter-percentage point to 3.75 %–4 %. The decision ended a three-year pause and was widely anticipated by bond markets, which had priced in a >90 % probability of a hike. Shortly after the announcement, the S&P 500 slipped below its pre-announcement level, while the 10-year Treasury yield hovered around 5 %, its highest since 2023.

Fed raises rates for first time since 2023, Warsh says inflation still too high

Warsh’s early public statements echoed Trump’s demand for lower borrowing costs, but persistent inflation and a renewed U.S.–Iran conflict have shifted the policy calculus. Since the war began, oil and gasoline prices have surged, pushing diesel to an all-time high of $6.31 per gallon (AAA) and keeping the consumer-price index (CPI) well above the Fed’s 2 % target.

The Fed raises interest rates for the first time in over three years

• Benchmark rate: now 3.75 %–4 % (previously 3.5 %–3.75 %).

Fox Business (website)

• Inflation: CPI up 3.4 % YoY in August; PCE at 3.7 % YoY, core PCE near 3.2 %.

Fortune Magazine

• Labor market: unemployment steady at ?4.1 %; weekly job gains keeping pace with workforce growth.

Fox Business (website)

• Energy: Brent crude at its highest monthly level; diesel at $6.31/gal.

The Guardian

• Bond market: 10-year Treasury yield around 5 %; market had priced a 25-bp hike at roughly 90 % before the meeting.

The Fed’s First Hike in Three Years: Why the Dollar and Gold Are Rising Together

Warsh highlighted “solid” economic activity, “resilient” domestic spending, “strong” productivity growth, and “robust” capital investment. He reiterated the Fed’s dual mandate, noting that the economy appears to be strengthening while inflation has not moved sufficiently toward target.

UsNews and World Report

• Projected rate path: Some outlets cite a median projection of 4.1 % by year-end, while others reference a dot-plot range of 4.25 %–4.5 %.

Euronews

• Inflation measures: Sources differ on the headline figure—CPI at 3.4 % YoY versus PCE at 3.7 % YoY.

Fed raises rates for first time since 2023, Warsh says inflation still too high

• “The plain fact is that inflation is too high and has been for too long,” — Kevin Warsh, Fed chair

The Guardian

• “Inflationremains elevated. Today's policy action will support a timelier return to the Committee's 2% goal,” — Kevin Warsh, Fed chair

UsNews and World Report

• “We must be confident that underlying inflation is moving to our objective clearly and at sufficient speed. Today the FOMC decided that this standard has not been satisfied,” — Kevin Warsh, Fed chair

WRC-TV NBCWashington

• “Our decision comes at a time when the American economy appears to be strengthening,” — Kevin Warsh, Fed chair

Fox Business (website)

The FOMC is scheduled to reconvene on October 25-26 and again on December 8-9. Projections released with the September decision indicate a strong likelihood of at least one additional 25-basis-point hike before the end of 2026, with the median forecast pointing to a 4.1 % target rate. Market participants will watch Warsh’s future remarks for any shift in forward guidance, especially as the midterm elections approach and geopolitical tensions persist.

CNBC