US Fed raises rates to 3.75%-4.00% and signals more hikes under Kevin Warsh
The first US rate increase in three years was unanimous, and 16 of 18 policymakers expect at least one more hike this year.
Source: Business Recorder · 17 September 2026, 4:22 am
The US Federal Reserve raised its benchmark interest rate by a quarter of a percentage point on Wednesday to a range of 3.75% to 4.00%, its first increase in three years and the first policy change under its new chair, Kevin Warsh.
The decision was unanimous. The central bank said inflation remained elevated and that the move would support a timelier return to its 2% target. Its updated projections showed 16 of 18 policymakers expecting at least one more quarter-point rise by the end of the year, with the policy rate projected at 4.00%-4.25% at year-end and through 2027.
Warsh, who took office in late May and had favoured holding rates at the Fed's July meeting, said a broad range of data, including the labour market, showed the economy had strengthened, and called the hike the right decision. The Fed's statement no longer attributed high inflation mainly to supply shocks in energy.
Policymakers raised their inflation estimate for this year to 3.7% from 3.6% and now expect inflation to reach 2% in 2029, a year later than before. They also lifted their growth forecast to 2.3% from 2.2% and lowered their year-end unemployment estimate to 4.1% from 4.3%.
President Donald Trump responded on Truth Social that US interest rates should be 1% or lower. After the announcement the dollar strengthened and two-year Treasury yields rose to their highest level in more than two years.
Futures markets priced about a 90% chance of another quarter-point hike by the end of the year, according to CME Group's FedWatch tool.
