FOMC Press Conference, September 16, 2026

FOMC Meeting Summary: Rate Hike Decision

Overview of the Federal Funds Rate Decision

• The FOMC raised the target range for the federal funds rate by 0.25% to 3.75%-4% to support the Federal Reserve's dual mandate.

• Economic activity is expanding solidly, with resilient domestic spending and strong productivity growth despite elevated uncertainty due to geopolitical factors.

• Job gains are consistent with workforce growth, and while unemployment remains stable, inflation continues to be a significant concern.

Economic Indicators and Inflation Concerns

• The American economy shows signs of strength through new hiring and robust business capital investment; credit flows are particularly strong for businesses.

• Labor market indicators remain positive, with low jobless rates around 4.1%, increasing job openings, and consistent unemployment claims reflecting full employment levels.

• Despite these strengths, inflation has been persistently above target for over five years; recent CPI and PPI data indicate ongoing inflationary pressures.

Commitment to Price Stability

• The committee emphasizes its commitment to price stability, noting that many categories still show price increases above 3%.

• A unanimous vote reflects the committee's resolve to achieve price stability more timely; confidence in underlying inflation trends is crucial for future actions.

Projections and Economic Outlook

• The summary of economic projections indicates real GDP growth at 2.3% this year and falling total PCE inflation from 3.7% this year to 2.3% next year.

• Unemployment is projected to hold steady at about 4.1%, with participants judging an appropriate federal funds rate of 4.1% by year's end.

Global Context and Future Considerations

• Observations from international meetings reveal that advanced economies face similar price pressures; decisions made by foreign central banks can influence U.S. monetary policy outcomes.

• The Fed aims to sustain economic progress in America while ensuring that those least well-off benefit from a stable labor market and prices.

Addressing Questions on Rate Hikes

Effectiveness of Smaller Rate Hikes

• In response to concerns about smaller rate hikes' effectiveness against energy supply-side inflationary pressures, it was noted that individual prices cannot be controlled directly but broader effects must be managed.

Market Reactions and Independence

• Questions arose regarding whether today's decision was influenced by market expectations; the Chairman emphasized that decisions are based on assessments rather than market predictions.

Changes Since Previous Meetings

• Differences between current conditions compared to July were discussed; key changes included strengthened economic data, persistent inflation trends not improving significantly, and evolving geopolitical situations influencing decisions.

Financial Conditions Assessment

Current Financial Conditions

• There is difficulty in describing financial conditions as restrictive; removing accommodation aims for consistency with ultimate objectives without causing undue harm.

Neutral Interest Rates Discussion

• When asked about neutral interest rates relative to current policies, it was clarified that while academically interesting, they do not dictate operational decisions today.

Implications of AI on Economy

AI Considerations

• Discussions highlighted concerns regarding AI's impact on demand-side economics; establishing a task force will help assess implications for future policy directions without overstepping into other governmental responsibilities.

Balancing Growth with Inflation Control

Managing Economic Growth

• It was asserted that achieving price stability does not necessitate harming labor markets or pushing growth below potential; sustainable economic growth should continue alongside efforts toward stable prices.