Federal Reserve Raises Interest Rates by Quarter Point as Inflation Remains Elevated
Published: September 16th, 2026.
WASHINGTON: —The Federal Reserve raised interest rates by a quarter percentage point Wednesday, citing persistently elevated inflation as policymakers seek to bring price growth back toward the central bank’s 2% target.”
The move represents a shift toward tighter monetary policy and can eventually affect borrowing costs throughout the economy, including rates on credit cards, business loans and some other forms of consumer borrowing.
In its statement, the committee said U.S. economic activity continues to expand at a solid pace despite heightened uncertainty, including uncertainty related to geopolitical developments.
Federal Reserve officials pointed to resilient domestic spending, strong productivity growth and robust capital investment. The committee also said job growth has kept pace with growth in the workforce, while the unemployment rate has changed little.
Inflation, however, remains elevated.
The Fed said Wednesday’s rate increase is intended to support a more timely return of inflation to its long-term target of 2%.
“The Committee will deliver price stability,” the FOMC said in its statement.
The Federal Reserve also said it will continue its policy of maintaining ample reserves in the banking system.
The federal funds rate is the overnight rate at which banks lend reserve balances to one another, but changes in the Fed’s target range can ripple across the broader economy. Higher rates generally make borrowing more expensive and can put downward pressure on economic demand, while savers may benefit from higher yields on some deposit accounts and other interest-bearing products.
The decision comes after the Fed had maintained a target range of 3.5% to 3.75% earlier this year.
The Federal Reserve’s September FOMC press conference was scheduled for Wednesday following the policy decision.