The Federal Reserve unanimously raised the target range for the federal funds rate by 25 basis points, to 3.75%–4.00%, in September 2026, in line with expectations and marking the first rate increase since 2023. Policymakers emphasized that inflation remains elevated and stated that the decision is intended to support a more timely return to the 2% inflation target.
Updated projections indicate that 16 of the 18 Fed officials anticipate at least one additional 25‑basis‑point rate hike before the end of the year. The outlook for economic growth has been revised slightly higher, with GDP now expected to expand by 2.3% in 2026 (up from 2.2% in the June projections) and by 2.4% in 2027 (up from 2.3%).
PCE inflation is now projected to be marginally higher this year, at 3.7% versus 3.6% previously, while the 2027 forecast remains unchanged at 2.3%. Core PCE inflation is similarly seen slightly higher in 2026, at 3.4% versus the prior 3.3%, with the 2027 projection left unchanged at 2.5%. The unemployment rate is now expected to be 4.1% in both 2026 and 2027, an improvement from the earlier forecast of 4.3% for each year.
