Story perspectives

Fed Raises Rates to 3.9% as Inflation Stays High

By Drooid · Sep 17, 2026, 10:32 PM UTC · How we work

Summary

Story summary

Federal Reserve raised its benchmark rate by a quarter point to 3.9% on September 16, 2026.
The committee cited inflation, higher gas prices from the Iran war, and resilient activity.
Fed Chair Kevin Warsh said inflation remains above the 2% target.
Core inflation was 3.7% year-over-year in July, up from 2.3% in April 2025.
President Donald Trump called the Fed board “hostile” and urged lower rates after the hike.

History

Historical Context

In the late 1970s stagflation, the Federal Reserve led by Paul Volcker lifted the federal-funds rate from roughly 11% in 1979 to a 20% peak in June 1981, pulling inflation from a 14.8% high in March 1980 down to below 3% by 1983. The tightening, paired with Ronald Reagan’s fiscal agenda, demonstrated that aggressive rate hikes can tame prices but also spark recession—a pattern echoed in inflation battles.

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Story summary

Federal Reserve raised its benchmark rate by a quarter point to 3.9% on September 16, 2026.
The committee cited inflation, higher gas prices from the Iran war, and resilient activity.
Fed Chair Kevin Warsh said inflation remains above the 2% target.
Core inflation was 3.7% year-over-year in July, up from 2.3% in April 2025.
President Donald Trump called the Fed board “hostile” and urged lower rates after the hike.

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