Federal Reserve Chair Kevin Warsh departs after delivering remarks during a news conference following Federal Open Market Committee meetings at Federal Reserve Headquarters on September 16, 2026 in Washington, DC. (Getty Images via AFP)
The U.S. Federal Reserve has signaled another interest rate increase this year, with new forecasts pointing to rates remaining elevated in 2027 and a slower return to its 2 percent inflation target.
The central bank raised its benchmark rate by 25 basis points to a range of 3.75–4 percent on Sept. 16, its first increase since July 2023. All 12 voting members supported the move.
“The plain fact is that inflation is too high and has been for too long,” Fed Chairman Kevin Warsh told reporters after the decision.
Sixteen of the 18 officials who submitted forecasts anticipated at least one further increase this year.
The median projection implies another quarter-point rise, taking the target range to 4–4.25 percent, with rates ending 2027 at the same level.
Warsh again declined to submit his own forecasts and said he would not provide forward guidance on policy.
Officials raised their forecast for inflation, measured by the personal consumption expenditures price index, to 3.7 percent this year from 3.6 percent in June. Their median outlook now puts a return to 2 percent in 2029, a year later than previously projected.
Warsh said summer inflation readings had not shown a meaningful improvement in underlying price pressures. Inflation had been above target for more than five years, he said, and commodity prices had risen since the previous policy meeting.
He described inflation risks as tilted upward, while risks to the labor market were broadly balanced.
The rate increase followed signs of a stronger economy, with improvements in hiring, earnings and business investment.
Warsh said credit was still flowing to businesses and that he did not regard overall financial conditions as restrictive.
Officials raised their growth forecast for this year to 2.3 percent from 2.2 percent and lowered their unemployment projection to 4.1 percent from 4.3 percent. Growth is expected to reach 2.4 percent next year.
The outlook runs counter to President Donald Trump’s repeated calls for lower borrowing costs. Responding to the decision on Truth Social, he said U.S. interest rates should be “1%, or less.”
White House spokesman Kush Desai called the increase “rather unfortunate,” telling Fox News that the administration did not believe it was backed by a particularly compelling economic case.
Warsh declined to discuss his conversations with Trump, who appointed him to succeed Jerome Powell earlier this year.
“I’ve got nothing for you on a discussion with the president,” he said when asked about his message to Trump.
For households, the increase could mean higher interest charges on credit cards and other variable-rate loans as lenders adjust their rates, adding to borrowing costs for consumers already facing years of price increases.
