The Federal Reserve's Open Market Committee raised its target range by a quarter percentage point this evening, to 3.75% to 4%.
Every figure here is taken from the statement and projections the Fed published this evening.
Errors or inaccuracies are possible. Spotted something that looks wrong? Write to me and I will correct it.
In brief - five things worth knowing:
- The rate rose to 3.75% to 4%, a quarter percentage point increase.
- The decision was unanimous, 12 to 0. In July three members dissented when the rate was held.
- The statement dropped the "supply shocks" explanation - the Fed no longer treats inflation as a temporary external phenomenon.
- 16 of 18 participants project at least one further rise by year-end. None projects a cut.
- Two meetings remain this year - at the end of October and the start of December.
What Was Decided
| In July | This evening | |
|---|---|---|
| Target range | 3.50% to 3.75% | 3.75% to 4% |
| Decision | held | raised a quarter point |
| Vote | 9 to 3 | 12 to 0 |
| Dissenters | Hammack, Kashkari and Logan - all for a rise | none |
The last row is the story. In the piece published here a week ago I wrote that the first line I would read is the dissent line. It is empty. Seven weeks ago a quarter of the voters wanted a rise and the majority refused; this evening all twelve voted for one. That is not a majority decision - it is a consensus.
The Sentence That Disappeared
And here is the detail most worth reading, because it is not in the headline.
In July the Fed wrote:
"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."
This evening it wrote:
"Inflation remains elevated. Today's policy action will support a timelier return to the Committee's 2 percent goal. The Committee will deliver price stability."
The explanation about supply shocks and energy has been removed.
Why it matters: when a central bank attributes inflation to a supply shock - say an oil price that jumped because of a war - that is usually a justification not to respond with rates, because rates do not lower the price of oil. Deleting the sentence is giving up that justification.
And the timing sharpens it: per the Bureau of Labor Statistics, the August consumer price index rose 0.4% on the month, and the gasoline index alone accounted for more than a third of the increase. So in precisely the month energy drove the number, the Fed stopped writing that energy is the explanation.
The New Dot Plot
This is the meeting with economic projections, and this is the rate participants project for end-2026:
| Rate at end-2026 | Participants | What it means from here |
|---|---|---|
| 4.375% | 4 | two further rises |
| 4.125% | 12 | one further rise |
| 3.875% | 2 | today's rise is the last |
| lower | 0 | a cut |
16 of 18 project at least one more rise this year. And in June the picture was entirely different: nine projected a higher rate, eight projected no change, and one projected a cut.
| The median | June projection | September projection |
|---|---|---|
| Rate at end-2026 | 3.8% | 4.1% |
| Rate at end-2027 | 3.6% | 4.1% |
| Rate at end-2028 | 3.4% | 3.9% |
| Longer-run rate | 3.1% | 3.2% |
| PCE inflation, 2026 | 3.6% | 3.7% |
| Core PCE inflation, 2026 | 3.3% | 3.4% |
| GDP growth, 2026 | 2.2% | 2.3% |
| Unemployment, end-2026 | 4.3% | 4.1% |
Two things stand out in the table. First - the 2027 projection rose half a percentage point, so the committee does not expect rates to fall next year but to stay high. And second - the unemployment projection actually fell. The committee is raising rates while projecting a stronger labour market, and that is exactly the combination that lets it be firm.
And What Brought It Here
Three pieces of information arrived between the July meeting and this evening:
| The data | What it showed |
|---|---|
| The August employment report | 162,000 jobs added against a forecast of about 53,000, and July revised from a loss to a gain |
| The August consumer price index | up 0.4% on the month, 3.4% on the year, with gasoline over a third of the monthly rise |
| The statement itself | "Economic activity is expanding at a solid pace" and "domestic spending has been resilient" |
And that explains the move from 9 to 3 to 12 to 0: the case of those who wanted to wait rested on a cooling labour market and on inflation sourced in energy. The employment data refuted the first, and the statement itself gave up the second.
And What Comes Next
Two meetings remain this year: 27-28 October and 8-9 December, the latter accompanied by updated projections.
The end-2026 median stands at 4.1% - so the committee is signalling one more rise at one of those two meetings. That is a projection by participants, not a commitment, and the chart changed a great deal between June and September - and it can change again the same way.
(Wall Street is still trading as of writing, so I am not quoting prices or the market reaction. Those will only be clear at the close.)
הזווית שלי
דעה אישית של אילן אברמוב - לא ייעוץ ולא המלצה
What I take from this evening is not the rise itself - it was a priced possibility, and the market knew it was on the table.
It is the move from 9 to 3 to 12 to 0 in seven weeks. A divided committee became a unanimous one, and that usually does not happen because of a single data print. It happens when the other side's argument falls apart, and here it fell apart in two stages: the employment report showed the labour market was not cooling, and the committee itself deleted from the statement the sentence that justified waiting.
And that deletion is, to my mind, the most important thing in the statement. As long as inflation is described as the result of an energy shock, a central bank has a legitimate reason to wait for the shock to pass. The moment it stops writing that, it is saying it does not intend to wait - and that holds especially while oil is still being moved by events in the Gulf.
And what surprised me most in the chart is the 2027 row. Rate rises usually come with a story of "raise now in order to cut later". Here the end-2027 median is identical to the end-2026 median. Participants are not describing a short hiking cycle - they are describing rates that stay high.
And I want to be careful not to turn this into a forecast. In June the same chart showed nearly an even split, and within three months it flipped. A dot plot is a picture of what committee members think today, not a promise about what they will do in December - and anyone reading it as a commitment is reading more into it than is written.
(It is important to stress: this is my personal opinion only, and nothing herein constitutes a recommendation to take any action or a rate forecast.)
