Inflation has run above the Fed's 2% target for 65 months. Will the Fed raise interest rates at its Sept 16 meeting?

The Federal Reserve raised its benchmark interest rate by 25 basis points on Sept. 16, 2026, lifting the target range to 3.75%-4% in its first increase since 2023. The Federal Open Market Committee, now led by Chair Kevin Warsh, voted unanimously for the hike after inflation remained above the central bank's 2% target for more than five straight years.

The committee's statement pointed to elevated inflation, driven partly by a surge in oil prices stemming from the conflict between the U.S. and Iran in the Strait of Hormuz, as the primary justification for tightening policy rather than holding steady. Warsh, who took over the Fed earlier this year, had signaled he would prioritize bringing inflation down even as some officials worried a hike could slow an economy still absorbing geopolitical shocks. Updated projections showed 16 of 18 officials anticipating at least one further increase before year-end.

Markets were split heading into the meeting, with some commentary suggesting Warsh would push for a hike while other officials remained unconvinced. The Predict Six community underestimated the odds, with only 47% forecasting a rate increase, making this one of the days the crowd got it wrong.