The Federal Reserve pushed its benchmark interest rate to a target range of 3.75% to 4.00% on Sept. 16 via a unanimous 12 to 0 vote. This move aims to support a timelier return to the central bank's 2% inflation goal and represents the first borrowing cost increase of the Kevin Warsh era. Economic activity expanded at a solid pace and domestic spending remained resilient despite elevated uncertainty, according to the Fed's policy statement, though inflation remains elevated.

The central bank increased its 2026 GDP growth forecast to 2.3% from 2.2% in June and raised PCE inflation to 3.7% from 3.6%. Core PCE inflation is now projected at 3.4%, up from 3.3%, while the unemployment forecast fell to 4.1% from 4.3%. Median projections indicate one more hike this year, with 12 of 18 officials expecting another increase in 2026. Projected rates for 2027 and 2028 rose to 4.1% and 3.9% from 3.6% and 3.4%, with a single cut expected by the end of 2028.