Fed lifts its target range by a quarter point to 3.75%-4.00%

The US Federal Reserve raised its target range for the federal funds rate by 0.25 percentage points, to 3.75%-4.00%, at the conclusion of its 16 September 2026 meeting. According to the Fed's own statement, all 12 voting members backed the move.

What happened

The committee's statement said inflation remains elevated and that the increase should help bring it back to the 2% goal more quickly. It described economic activity as expanding at a solid pace, noted that job gains have kept up with growth in the workforce, and said the unemployment rate has changed little. It also pointed to resilient spending despite uncertainty that it linked partly to geopolitical developments.

The quarterly projections drew most of the attention afterwards. Kitco reported that 16 of the 18 policymakers who submitted forecasts expect another quarter-point increase before the end of 2026, compared with six in June. Nation Thailand, citing the same projections, reported a 2026 inflation forecast (PCE measure) of 3.7%, up from 3.6% three months earlier.

Why it matters for traders

A central bank that is still raising rates tends to keep the dollar and short-term yields in focus for every currency pair, index and commodity price quoted in dollars. Decision days like this one often come with a burst of volatility: quotes can jump, spreads can widen for a few minutes, and stop orders can fill further from their trigger price than expected.

Higher benchmark rates also feed straight into trading costs. Overnight financing charged on leveraged positions is usually tied to market rates plus a broker markup, so holding a position for days or weeks costs more than it did when rates were lower. That is worth checking in a broker's published swap or financing schedule rather than assuming.

Projections are not promises. The committee can and does change course when data changes, which is why markets often react to each new inflation or jobs release as a small version of the same debate.

What to watch

• The minutes of this meeting and the next set of US inflation and employment releases.
• Financing or swap rates published by your broker, which can change when benchmark rates move.