Overview: September Fed meeting
The Federal Reserve (Fed) concluded its September 15th-16th meeting by raising the federal funds target range by a quarter of a percentage point to 3.75%–4.00%.
Developments from this meeting provided additional insight into how the Fed is thinking about inflation, economic growth, and the path of monetary policy. Below is a breakdown of the key takeaways and what they could signal moving forward.
1. The September decision marks a change in direction.
September’s quarter-point rate hike is significant for several reasons. First, this marks the first interest rate increase since 2023. Second, this decision follows several meetings in which policymakers held rates steady while monitoring persistent inflation.
Fed chair Kevin Warsh pointed to several shifts since the July meeting, including continued strength in the economy and labor market, inflation that remains elevated, and changes in the geopolitical environment. Together, those conditions led the committee to raise rates unanimously.
2. Inflation remains the Fed’s primary concern.
In his post-meeting press conference, Warsh said the Fed’s “predominant focus” is currently on price stability, noting that, in the eyes of the Fed, inflation remains too high and has been elevated for too long.
The Fed’s latest projections, which reflect policymakers’ individual assumptions about the appropriate path for monetary policy, call for overall personal consumption expenditures (PCE) inflation to finish 2026 at 3.7%, before declining to 2.3% in 2027. Warsh reiterated the Fed’s commitment to its 2% inflation objective and said the September rate increase shows the Fed’s “resolve to achieve price stability on a timelier basis.”
3. The economy continues to show strength.
Despite higher interest rates and ongoing geopolitical uncertainty, the Fed described economic activity as expanding at a solid pace. Domestic spending has remained resilient, productivity growth has been strong, and capital investment remains robust.
The Fed’s latest projections also point to slightly stronger economic growth. The median projection among the Federal Open Market Committee (FOMC) participants calls for real gross domestic product (GDP) to grow 2.3% in 2026 and 2.4% in 2027, compared with June projections of 2.2% and 2.3%, respectively.
With the economy and labor market remaining relatively strong, Warsh said the Fed’s “predominant focus” could remain on price stability.
4. The labor market remains healthy.
The Fed also continues to describe the labor market as strong. Warsh said employment is currently near full-employment levels, allowing the Fed to place greater emphasis on the price-stability side of its mandate. Additionally, job gains have kept pace with workforce growth, and the unemployment rate has remained relatively steady. The Fed now projects unemployment at about 4.1% at the end of 2026, down from its 4.3% projection in June.
Of course, future labor market conditions remain important. Warsh said risks to the labor market are currently “roughly balanced,” but a meaningful slowdown in hiring or increase in unemployment could alter how policymakers balance inflation concerns against supporting employment.
5. Another rate increase remains possible this year.
Alongside projections for PCE and unemployment, the Fed also released projections for the federal funds rate. The median policymaker projection places the federal funds rate at approximately 4.1% at the end of 2026. That would be consistent with an additional quarter-percentage-point increase from today’s new range.
However, these projections are not commitments. Individual Fed officials have different expectations, and Warsh reiterated that the Fed will evaluate economic conditions and make decisions based on the information available at each meeting.
6. What this could mean for your finances.
Here are a few considerations:
- Borrowing costs could move higher. Credit cards, home equity lines of credit, auto loans, personal loans, and some business financing tend to be more directly influenced by short-term interest rates. The Fed’s latest increase could therefore add to borrowing costs for consumers and businesses.
- Mortgage rates may not move in lockstep with the Fed. Fixed mortgage rates are influenced more directly by factors such as inflation expectations and longer-term Treasury yields than by the federal funds rate itself. Mortgage rates had already moved higher ahead of the September meeting as markets responded to inflation data and expectations of a Fed rate hike.
- Savers could continue to benefit from higher rates. High-yield savings accounts, money market accounts, and certificates of deposit (CDs) may continue offering relatively attractive yields while short-term interest rates remain elevated.
- Markets could experience some volatility. Rate-hiking cycles can contribute to periods of market turbulence, although Fed policy is only one of many factors that can influence changes in investment markets.
- Staying focused on your long-term financial plan remains important. Fed decisions can influence short-term market conditions, but long-term investing is generally built around your goals, time horizon, diversification, and disciplined decision-making rather than any single interest rate announcement.
We will continue monitoring economic data, Fed policy, and market developments as they evolve. As always, if you would like to discuss your portfolio, financial plan, or investment strategy, please do not hesitate to contact us.
Sources
Federal Reserve issues FOMC statement. (2026). Board of Governors of the Federal Reserve System. https://www.federalreserve.gov/newsevents/pressreleases/monetary20260916a.htm
O’Donnell, G. (2026, September 16). Fed meeting live updates: Fed hikes interest rates by 25 basis points for first time in 3 years in unanimous decision. Yahoo Finance; Yahoo! Finance. https://finance.yahoo.com/economy/policy/live/federal-reserve-meeting-live-updates-chairman-kevin-warsh-143452661.html
Cox, J. (2026, September 16). Fed meeting live updates: Rate hike expected for the first time in three years. CNBC. https://www.cnbc.com/2026/09/16/fed-meeting-today-live-updates.html
Federal Reserve Board and Federal Open Market Committee release economic projections from the September 15-16 FOMC meeting. (2026). Board of Governors of the Federal Reserve System. https://www.federalreserve.gov/newsevents/pressreleases/monetary20260916b.htm
Bundrick, H. (2026, September 16). What a Fed rate hike means for your bank accounts, loans, credit cards, and investments. Yahoo Finance; Yahoo! Finance. https://finance.yahoo.com/personal-finance/banking/article/what-a-fed-rate-hike-means-for-your-bank-accounts-loans-credit-cards-and-investments-220526102.html
Campisi, N. (2019, October 30). How the Fed’s interest rate decisions affect mortgage rates. Bankrate; Bankrate.com. https://www.bankrate.com/mortgages/federal-reserve-and-mortgage-rates/
Will a Fed Cut Affect Mortgage Rates. (2025). NerdWallet. https://www.nerdwallet.com/mortgages/learn/fed-mortgage-rates
Wood, K. (2026, September 16). Why Mortgage Rates Shot Toward 7% Before the Fed Raised Rates – NerdWallet. NerdWallet. https://www.nerdwallet.com/mortgages/news/rates-high-fed-raises-9-16-26
Hyatt, D. (2026, September 14). Can Interest Rate Hikes Really Fix Inflation? Some Experts Think Not. Investopedia. https://www.investopedia.com/can-federal-reserve-interest-rate-hikes-really-fix-inflation-12121047
Reserve, F. (2026, September 16). Transcript of Chairman Warsh’s Press Conference Opening Statement, September 16, 2026. https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20260916.pdf
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