ab ovo

FOMC raises rates a quarter point on a 12-0 vote

16 September 2026

The Federal Open Market Committee raised its target range for the federal funds rate on 16 September 2026, “by 1/4 percentage point to 3-3/4 to 4 percent.”1 The Committee “approved the following statement for release by a 12 – 0 vote.”1 An increase of that size was the majority expectation before the meeting — prediction markets put it at roughly 79.5 percent on 13 September and CME FedWatch at roughly 58.4 percent — so the rate decision itself was close to priced.2 The vote line was not. At the previous meeting, on 28–29 July, the Committee held the range at 3-1/2 to 3-3/4 percent on a 9-3 vote, with Beth M. Hammack, Neel Kashkari and Lorie K. Logan voting against because they “preferred to raise the target range for the federal funds rate by 1/4 percentage point at this meeting.”34 Seven weeks later the Committee made that increase with no votes against.

The statement also drops a sentence. July attributed elevated inflation in part to “supply shocks that have driven price increases in certain sectors, including energy.”3 September says only: “Inflation remains elevated. Today’s policy action will support a timelier return to the Committee’s 2 percent goal.”1 The assertion that “[t]he Committee will deliver price stability” is carried over from July verbatim.13

  1. Mitigation of the July dissent is recorded nowhere, because there is no dissent to record. The Committee’s statements name members only in the dissent sentence: neither the July nor the September statement lists voting members, and July named only the three who voted against.13 A unanimous line therefore removes from the September record the attribution that made the July split legible, and the minutes are the next document that could supply it.4

  2. Median projections moved further than the decision did. The median projection for the federal funds rate at the end of 2026 is now 4.1 percent against 3.8 percent in June, and 4.1 percent for 2027 against 3.6.5 The median unemployment projection for 2026 was revised from 4.3 to 4.1 percent and median real GDP growth from 2.2 to 2.3, while median PCE inflation went from 3.6 to 3.7 and core from 3.3 to 3.4.5 These are medians of individual participants’ assessments of appropriate policy, not a Committee forecast and not a commitment.5

  3. Today’s action puts the midpoint of the target range at 3.875 percent. Table 1 states the federal funds projections as the midpoint of each participant’s projected appropriate target range at year end, which is what makes the two figures comparable: the 2026 median of 4.1 percent sits above the range set today.5

  4. Four administered rates were set alongside the decision, effective 17 September 2026. The Board of Governors “voted unanimously to raise the interest rate paid on reserve balances to 3.90 percent” and “voted unanimously to approve a 1/4 percentage point increase in the primary credit rate to 4.0 percent.”6 The Committee directed the Open Market Desk to “[c]onduct standing overnight repurchase agreement operations at a rate of 4.0 percent” and standing overnight reverse repurchase operations “at an offering rate of 3.75 percent and with a per-counterparty limit of $160 billion per day.”6 The Board approved discount-rate requests “submitted by the Board of Directors of the Federal Reserve Banks of Cleveland, Richmond, Atlanta, Chicago, Minneapolis, Kansas City, and Dallas” — seven boards.6 The Committee also continues “its policy of maintaining ample reserves in the banking system.”1

Footnotes

  1. Board of Governors of the Federal Reserve System, “Federal Reserve issues FOMC statement,” released 2:00 p.m. EDT, 16 September 2026, for the meeting of 15–16 September 2026. Quoted for the vote line, the decision, the ample-reserves sentence, the inflation sentence and the price-stability sentence. The statement names no individual voters. https://www.federalreserve.gov/newsevents/pressreleases/monetary20260916a.htm ↩ ↩2 ↩3 ↩4 ↩5 ↩6

  2. Prediction markets and CME FedWatch as reported on 13 September 2026, three days before the meeting, and recorded in advance in this corpus at observation fomc-decision-2026-09-16. Both are Tier 4 aggregators read at second hand and neither is primary; the two disagreed materially — roughly 79.5 per cent against roughly 58.4 per cent for a 25 basis point increase — so the range is the expectation rather than either figure. Recorded here because a decision that matched the consensus should not be reported as though it had not been anticipated. ↩

  3. Board of Governors of the Federal Reserve System, “Federal Reserve issues FOMC statement,” released 2:00 p.m. EDT, 29 July 2026, for the meeting of 28–29 July 2026. Quoted for the 9-3 vote line, the decision to maintain the range at 3-1/2 to 3-3/4 percent, the supply-shock inflation sentence, the price-stability sentence, and the dissent: “Voting against the monetary policy action were Beth M. Hammack, Neel Kashkari, and Lorie K. Logan, who preferred to raise the target range for the federal funds rate by 1/4 percentage point at this meeting.” Apart from the three dissenters, the statement lists no voting members. https://www.federalreserve.gov/newsevents/pressreleases/monetary20260729a.htm ↩ ↩2 ↩3 ↩4

  4. See FOMC holds at 3½–3¾ percent over three dissents seeking a hike for the July decision, and July FOMC minutes record the Chairman’s case for a six-meeting calendar for the minutes released 19 August, which set out the hawkish case. ↩ ↩2

  5. Board of Governors of the Federal Reserve System, “Summary of Economic Projections,” 17 pages, released 2:00 p.m. EDT, 16 September 2026. Table 1 medians, September against June in parentheses: change in real GDP 2.3 (2.2) for 2026, 2.4 (2.3) for 2027; unemployment rate 4.1 (4.3) for 2026 and 4.1 (4.3) for 2027; PCE inflation 3.7 (3.6) for 2026, 2.3 (2.3) for 2027; core PCE inflation 3.4 (3.3) for 2026, 2.5 (2.5) for 2027; federal funds rate 4.1 (3.8) for 2026, 4.1 (3.6) for 2027, 3.9 (3.4) for 2028, 3.6 (3.1) for 2029, longer run 3.2. Table 1’s note defines the median as the middle projection when arranged from lowest to highest, and states the federal funds projections as the value of the midpoint of the projected appropriate target range at the end of the year indicated. Each participant’s projections rest on that participant’s own assessment of appropriate policy. https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20260916.pdf ↩ ↩2 ↩3 ↩4

  6. Board of Governors of the Federal Reserve System, “Implementation Note issued September 16, 2026.” All rates quoted take effect 17 September 2026. The note also directs the Desk to undertake open market operations as necessary to maintain the federal funds rate in the 3-3/4 to 4 percent target range, and to “[r]einvest all principal payments from the Federal Reserve’s holdings of agency securities into Treasury bills.” Whether the repurchase and reverse repurchase rates moved at this meeting is not established here; the July implementation note was not consulted. https://www.federalreserve.gov/newsevents/pressreleases/monetary20260916a1.htm ↩ ↩2 ↩3

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