US Federal Reserve Raises Interest Rates for the First Time Since July 2023

At its September meeting of the Federal Open Market Committee, the US Federal Reserve raised the policy rate by 25 basis points to a range of 3.75 to 4 percent. This decision marked the bank's first interest rate hike since July 2023.

Change in Interest Rates

The US Federal Reserve decided to increase the policy rate by 25 basis points at the Federal Open Market Committee's September meeting. With this move, the target range for the federal funds rate was raised to between 3.75 and 4 percent.

The bank was known to have kept interest rates unchanged at the 3.50 to 3.75 percent level during the first five meetings of the year.

First Since July 2023

This 25-basis-point increase marks the first interest rate hike implemented by the US Federal Reserve since July 2023.

The committee made this decision with a 12-0 unanimous vote, revising the target range for the federal funds rate upward.

Economic Assessments

The published statement emphasized that economic activity continues to expand at a solid pace.

Additionally, the text noted that productivity growth is strong, capital investments are robust, and inflation remains elevated.

Future Outlook and Expectations

According to updated projections, 16 officials foresee at least one additional rate hike within this year.

The median interest rate projection for the end of 2026 was raised from 3.8 percent to 4.1 percent.

Growth and Inflation

Bank management raised its 2026 growth forecast from 2.2 percent to 2.3 percent.

The 2026 forecast for the core PCE price index was raised to 3.4 percent, while the headline PCE inflation expectation was increased to 3.7 percent.

Unemployment Rate Forecasts

According to the updated data released, forecasts regarding the unemployment rate were also revised.

It was reported that unemployment projections were adjusted to 4.1 percent for the years 2026 and 2027.