Federal Reserve Raises Rates to 3.75%-4% in First Hike Since 2023, Signals Another Possible Increase

The Federal Reserve raised its benchmark interest rate by a quarter percentage point on September 16, 2026, bringing the federal funds rate to a target range of 3.75%-4%. The Federal Open Market Committee voted 12-0 in favor of the move, marking the central bank's first rate increase in more than three years as it works to combat elevated inflation driven by rising energy prices and other factors. Updated economic projections from the Fed signal the possibility of at least one additional rate hike before year end.

For consumers, the increase will raise borrowing costs on credit cards and auto loans, which are tied closely to the federal funds rate and tend to move quickly. Mortgage rates, which are influenced more by bond markets than by the Fed directly, are not expected to be immediately affected by the hike. Savers stand to benefit, with deposit rates on savings accounts and certificates of deposit likely to move higher in response.