Fed’s September rate increase targets elevated inflation

The Federal Reserve raised its federal funds target range by 25 basis points to 3¾–4 per cent on September 16, 2026. The vote was unanimous, 12–0.

The increase was decided at the September 15–16 policy meeting. The Fed published that meeting’s minutes on October 7.

The federal funds target range guides the Fed’s policy setting for short-term interbank lending. Changes influence wider financing conditions through markets and lenders, with the effect varying among loans and borrowers.

The statement described inflation as elevated relative to the Fed’s two per cent goal. That assessment supplies the inflation context for a tighter policy setting.

The Fed described economic growth as solid, supported by resilient domestic spending, strong productivity and robust capital investment.

Productivity measures output relative to the inputs used to produce it. Capital investment is spending on productive assets. Both featured in the Fed’s assessment of continued economic resilience.

Job growth was keeping pace with workforce growth, the statement said, while unemployment had changed little.

The statement also noted continuing geopolitical uncertainty around the outlook.

The Fed continued policy implementation consistent with ample bank reserves, the balances held in the banking system’s monetary operating framework.