Fed Raises Rates for the First Time Since 2023 and Signals Another
The unanimous quarter-point increase takes the federal funds range to 3.75 to 4 percent. Most officials expect one more hike before the end of the year.
The Federal Reserve raised its benchmark interest rate by a quarter percentage point on Wednesday, September 16, to a target range of 3.75 to 4 percent, its first increase since July 2023, the Fed's statement said. The vote was 12 to 0. 'Inflation remains elevated,' the Federal Open Market Committee said, adding that the move would support a timelier return to its 2 percent goal.
The Fed's new projections showed most officials expect one more quarter-point increase this year, with the median forecast putting the rate at 4.1 percent at year-end, no change in 2027 and cuts in 2028 and 2029, according to J.P. Morgan Asset Management's summary. Chairman Kevin Warsh said at his news conference that policymakers had an 'attitude of optimism' about the economy but were concerned about inflation, which has been pushed up this year by oil prices.
What it means: the prime rate, which most credit cards and home equity lines follow, rises by the same amount, to 7 percent. Savings yields tend to rise too. Mortgage rates follow longer-term Treasury yields and do not move one-for-one with the Fed.
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