As inflation remains well above target and the energy shock from the war with Iran continues to weigh on the outlook, the Federal Reserve is expected to raise the target range for the federal funds rate by 25 basis points in September 2026, making it the first rate increase since 2023. In August, core inflation was 2.4% and headline inflation was 3.4% year-over-year. In the meantime, diesel prices have increased to $6 per gallon, putting additional pressure on the inflation outlook as the conflict seems to be getting worse. Chair Warsh stated in his Jackson Hole speech last month that the Fed would have "work to do" if it was not confident that underlying inflation was decreasing. Economic projections will also be revised by policymakers. The so-called "dot plot" revealed in June that nine officials anticipated at least one rate increase this year, and six officials anticipated at least two. At the time, Chair Warsh did not provide a forecast.
Today is Fed decision day - **September 16, 2026**.
**Right now, before the announcement:**
* **Current target range:** 3.50% to 3.75% - where it has been all of 2026
* According to the Fed's H.15 publication from yesterday, the Effective Fed Funds Rate, or what banks actually charge, was 3.63 percent on September 14. * Other rates linked to it include Prime at 6.75 percent and Discount Window at 3.75 percent What is anticipated today: The FOMC will make its decision at **2:00 p.m. ET / 11:30 p.m. IST today**, with Chair Kevin Warsh press conference at 2:30 p.m. ET.
Markets are anticipating a 25-basis-point increase to 3.75 percent to 4.0%, the first increase since 2023. It was referred to as "a time to hike?" on the Reuters live blog this morning. noting inflation is still above the 2% target, oil back over $100, and the 10-year Treasury just breached 5% again.
If they do hike, borrowing costs for credit cards, auto loans, and mortgages will tick up slightly, but savings/CD yields would also rise.
Would you mind if I ping you when the actual decision is announced at 2 p.m. ET?
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