FOMC raises the target range 25bp to 3.75-4.00%, its first increase since July 2023
The Committee voted 12-0 to raise the federal funds target range by one quarter percentage point, reversing the last of the three 2025 cuts. The decision was unanimous after July's 9-3 hold, in which Beth M. Hammack, Neel Kashkari, and Lorie K. Logan dissented in favor of the same 25bp increase adopted today. The statement drops July's attribution of elevated inflation to supply shocks and offers no forward guidance on further adjustments.
| Item | Prior | New |
|---|---|---|
| Fed funds target range | 3.50-3.75% | 3.75-4.00% (+25bp) |
| Interest on reserve balancesIORB | 3.65% | 3.90% (+25bp) |
| Overnight reverse repo offering rateON RRP | 3.50% | 3.75% (+25bp) |
| Standing repo facility minimum bidSRF | 3.75% | 4.00% (+25bp) |
| Primary credit ratediscount window | 3.75% | 4.00% (+25bp) |
| Vote | 9-3 (Jul 29) | 12-0 |
| Effective | - | Sep 17, 2026 |
| Section | July 29 | September 16 |
|---|---|---|
| Policy action | "The Committee decided to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 percent, in support of the Federal Reserve's dual mandate." | "The Committee decided to raise the target range for the federal funds rate by 1/4 percentage point to 3-3/4 to 4 percent, in support of the Federal Reserve's dual mandate." |
| Activity | "Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong." | "Economic activity is expanding at a solid pace. While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient. Productivity growth is strong, and capital investment is robust." |
| Inflation | "Inflation remains elevated relative to the Committee's 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy." | "Inflation remains elevated. Today's policy action will support a timelier return to the Committee's 2 percent goal." |
| Vote | 9-3. Hammack, Kashkari, and Logan "preferred to raise the target range for the federal funds rate by 1/4 percentage point at this meeting." | 12-0. No dissents. |
Supply-shock framing removed. In July the Committee attributed part of elevated inflation to energy-driven supply shocks, language that supported looking through the price pressure. September drops that attribution entirely, which reads as the Committee no longer treating the energy impulse as something policy can wait out.
A demand-side justification was added. The clause "domestic spending has been resilient" is new. Paired with the upgrade from "strong" to "robust" capital investment, the statement grounds the hike in the strength of demand, not only in the inflation print.
Geopolitical reference generalized. July's "the conflict in the Middle East" becomes "geopolitical developments," and uncertainty is now subordinated to the resilience of domestic spending rather than framed as a qualifier on growth.
No signal on sequencing. The statement contains no forward guidance on the extent or timing of further moves. The phrase "timelier return to the Committee's 2 percent goal" frames today's action on its own, and the July dissenters' position became the unanimous one. Whether this is a single adjustment or the start of a series is left to the data and to the October meeting.
| Effective | Target range | Chg |
|---|---|---|
| Jul 27, 2023cycle peak | 5.25-5.50% | +25bp |
| Sep 19, 2024 | 4.75-5.00% | -50bp |
| Nov 8, 2024 | 4.50-4.75% | -25bp |
| Dec 19, 2024 | 4.25-4.50% | -25bp |
| Sep 18, 2025 | 4.00-4.25% | -25bp |
| Oct 30, 2025 | 3.75-4.00% | -25bp |
| Dec 11, 2025 | 3.50-3.75% | -25bp |
| Sep 17, 2026today's decision | 3.75-4.00% | +25bp |