Story perspectives

Fed Raises Rates 25 Basis Points to 3.75%–4%

By Drooid · Sep 17, 2026, 2:47 PM UTC · How we work

Summary

Story summary

The Federal Reserve raised the federal funds rate 25 basis points to 3.75%–4% on September 16, 2026, unanimously.
President Donald Trump said he trusts Fed Chair Kevin Warsh but described the board as hostile after the rate hike.
Fed officials projected the federal funds rate will end 2026 at 4.1%, implying one more quarter-point increase.

History

Historical Context

In October 1979, Federal Reserve Chairman Paul Volcker dramatically raised the discount rate to 12% to confront soaring U.S. inflation. Volcker’s policy, backed by Treasury Secretary Michael Blumenthal, pushed the federal funds rate toward a 20% peak, slashing inflation from 13.5% to 3.2% by 1983. Today's unanimous 25-basis-point hike to a 3.75%–4% range mirrors Volcker’s aggressive stance, as President Donald Trump publicly questioned the Fed’s hostility while trusting Chair Kevin Warsh. The 1979 episode shows that sharp rate increases can eventually tame price pressures, suggesting the 2026 trajectory may curb inflation but risk slowing growth.

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Story summary

The Federal Reserve raised the federal funds rate 25 basis points to 3.75%–4% on September 16, 2026, unanimously.
President Donald Trump said he trusts Fed Chair Kevin Warsh but described the board as hostile after the rate hike.
Fed officials projected the federal funds rate will end 2026 at 4.1%, implying one more quarter-point increase.

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