Fed Raises Rates 25 Basis Points to 3.75%-4%, Signals More Hikes Ahead as Stocks Reverse Gains

The Federal Reserve raised its benchmark interest rate by 25 basis points on September 16, 2026, bringing the target range to 3.75%-4% in the central bank's first rate increase since July 2023. The decision was unanimous, with all 12 FOMC members voting in favor, a notable shift from July when three members dissented in favor of a hike.

Fed Chair Kevin Warsh signaled that further tightening is likely, stating that inflation remains sticky and that summer readings have not demonstrated improving underlying trends. Eight FOMC officials projected at least one additional hike in 2027, six saw rates holding steady, and four anticipated cuts, keeping the path of policy contested.

U.S. stocks reversed earlier gains following the decision and Warsh's press conference. The S&P 500 fell roughly 0.43%-0.45%, closing at approximately 7,551, while the Dow Jones Industrial Average tumbled around 1.17%-1.25%, dropping as much as 650-600 points at session lows. The Nasdaq Composite finished nearly flat, down just 0.01%. All three indexes had been higher before the Fed acted.