| Consensus | Consensus Range | Actual | Previous | |
| Change | 25bp | 0bp to 25bp | 25bp | 0bp |
| Federal Funds Rate - Target Range | 3.75 to 4.00% | 3.50 to 3.75% to 3.75 to 4.00% | 3.75 to 4.00% | 3.5 to 3.75% |
Highlights
As expected, the FOMC raised the fed funds target rate range by 25 basis points to 3.75 to 4.00 percent.
The decision was unanimous (12-0), which means it included the Fed chairman himself.
The statement said"Today’s policy action will support a timelier return to the Committee’s 2 percent goal."
It repeated"The Committee will deliver price stability" and"inflation remains elevated".
It continued to qualify economic activity as"solid" with"resilient" domestic spending despite"elevated" uncertainty due to"geopolitical developments".
"Productivity growth is strong, and capital investment is robust. Job gains have kept pace with the workforce, and the unemployment rate has changed little," the FOMC added.
The statement provided no indication on whether further hikes are coming.
The update to the quarterly summary of economic projections (SEP) occurs amid the ongoing Middle East conflict and sticky inflationary pressure, with the inflation rate remaining at 3.4 percent in August.
Since the last update of economic projections, GDP growth was revised up for 2026 to 2.3 percent from 2.2 percent, and for 2027 to 2.4 percent from 2.3 percent. The projection for 2028 GDP growth was unchanged at 2.2 percent and the initial projection for 2029 is 2.1 percent.
The longer-run forecast is maintained at 2.0 percent, overall still reflecting expectations for continued modest growth.
The unemployment rate forecast is now projected to remain at 4.1 percent throughout the projection horizon, revised down from 4.3 percent in 2026 and 2027, and from 4.2 percent in 2028.
The forecasts for inflation as measured by the PCE deflator were little changed: 3.7 percent for 2026, revised from 3.6 percent; maintained at 2.3 percent for 2027; revised up to 2.1 percent from 2.0 percent for 2028, with the slowdown continuing to 2.0 percent in 2029.
The profile was similar for core PCE inflation: revised up to 3.4 percent from 3.3 percent for 2026, maintained at 2.5 percent for 2027, revised up to 2.2 percent from 2.1 percent for 2028, and reaching target at 2.0 percent in 2029.
The forecast for the mid-point of the fed funds target rate range was lifted to 4.1 percent for 2026 and 2027 from 3.8 percent and 3.6 percent, respectively, coming back down to 3.9 percent in 2028 (revised up from 3.4 percent). The projection for 2029 is 3.6 percent.
Market Consensus Before Announcement
After the latest CPI report showed rising core inflation, the consensus looks for a 25 basis point rate hike, perhaps as a one-off, perhaps as the start of a tightening cycle, depending on what happens with energy prices.
Definition
The FOMC meeting announcement is a policy statement issued at the conclusion of each meeting of the Federal Open Market Committee. It offers updates on economic conditions with special focus on the health of the labor market and the latest on inflation. It also updates the status of the federal funds target which is the FOMC's official policy interest rate. This rate is expressed within a range, such as 1.75 to 2.00 percent. The center of this range is the implied target. The higher this target, the more restrictive monetary policy becomes, the lower this target, the more accommodative policy becomes. Other policy tools are also discussed in the meeting announcement including updates on direct purchases of Treasuries and mortgage-backed securities. Debate is not offered in the statement, just the consensus view is expressed, though the statement does list the total committee vote and how each member voted.