Federal Reserve Raises Interest Rate to 3.75%-4% Range

The US Federal Reserve increased its key interest rate to a target range of 3.75% to 4%, marking the first hike since 2023. The Federal Open Market Committee (FOMC) announced the decision on Wednesday, reflecting ongoing efforts to manage inflation and economic growth.

Inflation and Growth Outlook

The median projection for inflation, measured by the personal consumption expenditures (PCE) price index, has been adjusted to 3.7% for 2026, up from the 3.6% forecast issued in June. Officials expect PCE inflation to ease to 2.3% next year, while the projection for 2028 has risen slightly to 2.1% from an earlier estimate of 2%. Fed officials now anticipate the gross domestic product (GDP) to expand by 2.3% in 2026, a modest increase from the 2.2% forecast in June.

The unemployment rate stood at 4.1% as of August, and policymakers expect it to remain at that level through the end of 2026 and continue steady through 2029. This outlook suggests a stable labor market amid the Fed's monetary policy adjustments.