Story perspectives

Fed Raises Rates Again as Inflation Stays Above 2%

By Drooid · Sep 30, 2026, 10:50 PM UTC · How we work

Summary

Story summary

The Federal Reserve raised rates for the first time in years after August inflation rose 0.3% monthly and 3.4% annually.
Inflation remains above the Fed’s 2% target, extending the cost burden on households.
The Commerce Department retroactively applied a new formula to data back to 2021, lowering previously reported core inflation.
Fed officials project the benchmark rate will stay 3.75%-4% and expect at least one more quarter-point hike this year.

History

Historical Context

In June 1981, Fed Chairman Paul Volcker raised the federal-funds rate to a 20% peak to end double-digit inflation that had reached 14.8% the year before. The move triggered a recession that pushed unemployment to 10.8% in 1982 and lowered inflation below 3% by 1983. Today, Fed Chair Jerome Powell confronts inflation at 3.4% YoY, with a policy rate target near 3.75-4%.

1 of 2

Story summary

The Federal Reserve raised rates for the first time in years after August inflation rose 0.3% monthly and 3.4% annually.
Inflation remains above the Fed’s 2% target, extending the cost burden on households.
The Commerce Department retroactively applied a new formula to data back to 2021, lowering previously reported core inflation.
Fed officials project the benchmark rate will stay 3.75%-4% and expect at least one more quarter-point hike this year.

1 / 2