Fed Lifts Key Rate to 3.75%-4% in First Hike Under Warsh
The Federal Open Market Committee raised its target range for the federal funds rate to 3.75% to 4% in September 2026, as reported by Kiplinger.
That is 25 basis points above the 3.5% to 3.75% range that was in place before. A basis point is one-hundredth of a percentage point, so 25 basis points is a quarter point. The federal funds rate is the rate banks charge each other for overnight loans. It acts like a floor for many other rates.
Timing and leadership
The decision was scheduled for announcement at 2 p.m. EDT (1800 GMT), according to Reuters. It was the first rate hike under Chair Kevin Warsh.
Warsh is Chairman of the Federal Reserve, as identified in a Federal Reserve speech release dated Aug. 28, 2026. In the month before the September decision, Warsh gave a high-profile speech about inflation, according to AP. In remarks around that Aug. 28 speech, Warsh said inflation is still too high and suggested the central bank may have to raise interest rates, AP reported.
The path to September
The Committee held the target at 5.25% to 5.5% in its statement of July 31, 2024. It held the target at 4.25% to 4.5% in its statement of Jan. 29, 2025. It then lowered the target by a quarter point to 4% to 4.25% on Sept. 17, 2025, and lowered it by another quarter point to 3.5% to 3.75% on Dec. 10, 2025, according to Federal Reserve releases. The Committee held the range at 3.5% to 3.75% on July 29, 2026, according to the Federal Reserve.
Cuts through late 2025. A hold through July. Then a hike in September.
The broader context here is a change in direction, not a continuation. Short-term rates and the interest paid on bank reserves adjust to the new range. For savers, borrowers and investors, that shift can feed into savings yields and loan costs over time.
In my view, the order of events matters for reading this Committee. An August warning followed by a September move points to a group willing to act on its inflation talk without a long wait. That shortens the delay to expect between tough talk and action. It puts more weight on incoming inflation reports than on jobs data.
