Fed Rate Decision September 2026: Will the FOMC Raise Interest Rates?
Last updated: September 14, 2026
The Federal Reserve is heading into its September 2026 meeting with an unusually important question in front of it: should interest rates go higher, or should policymakers wait?
The central bank is expected to keep its current policy steady until the conclusion of the Federal Open Market Committee (FOMC) meeting on September 15-16, 2026. The rate decision is due at 2:00 p.m. Eastern Time on September 16, followed by the Fed's press conference at 2:30 p.m. ET.
Right now, the case for another rate increase is getting stronger. August payroll growth was solid, while inflation remains above the Fed's 2% goal. At the same time, some of the recent inflation pressure is coming from energy, which makes the picture more complicated.
The important point: The Fed has not announced what it will do in September. Market expectations can change before the meeting, and only the FOMC's actual decision will determine the new policy rate.
Fed Rate Decision September 2026: At a Glance
| Key indicator | Latest reading |
|---|---|
| September FOMC meeting | Sept. 15-16, 2026 |
| Rate decision | Sept. 16 at 2:00 p.m. ET |
| Current federal funds target | 3.50%–3.75% |
| August CPI inflation | 3.4% year over year |
| August core CPI | 2.4% year over year |
| August payroll growth | +162,000 |
| August unemployment rate | 4.1% |
| August PPI | +5.4% year over year |
Sources: Federal Reserve and U.S. Bureau of Labor Statistics.
When Is the September 2026 Fed Rate Decision?
The September FOMC meeting is scheduled for Tuesday, September 15, and Wednesday, September 16.
The Federal Reserve's calendar lists:
- September 15-16: Two-day FOMC meeting
- September 16, 2:00 p.m. ET: FOMC decision
- September 16, 2:30 p.m. ET: Fed chair's press conference
For Americans following the decision, 2:00 p.m. Eastern Time is the key time to watch.
The statement will tell investors what the FOMC decided and provide clues about how officials view inflation, employment and economic growth.
The press conference that follows can be just as important because the Fed's chairperson can explain why policymakers chose to raise, hold or otherwise adjust rates.
What Is the Fed's Current Interest Rate?
The Fed's current target range for the federal funds rate is 3.50% to 3.75%.
At its July 2026 meeting, the FOMC voted 9-3 to keep the target range unchanged. Three members preferred a 0.25-percentage-point increase.
That July vote matters because it shows that there was already disagreement inside the committee over whether rates were high enough.
If the Fed were to raise rates by a quarter percentage point in September, the target range would theoretically move from:
3.50%–3.75% → 3.75%–4.00%
Means expectation of rate hike by 25 basis point. That is a hypothetical outcome - not a prediction of what the FOMC will announce.
Why Could the Fed Raise Rates in September?
There are two major pieces of the inflation-and-employment puzzle that policymakers keep in mind while making policies.
1. Inflation is still above the Fed's 2% goal
The latest Consumer Price Index report showed that consumer prices increased 3.4% over the 12 months through August.
Core CPI, which excludes food and energy prices, increased 2.4% over the same period, down from 2.5% in July.
For someone unfamiliar with economic data, think of it this way:
• Headline CPI: Looks at prices across the consumer basket.
• Core CPI: Removes food and energy to give economists a cleaner view of underlying price pressures.
The Fed's long-run inflation goal is 2%, so both measures remain important.
There is another complication: energy prices have been particularly strong.
The BLS reported that the energy index increased 16.3% over the year, while gasoline prices were up 27.4%. Gasoline alone increased 3.9% in August and accounted for more than one-third of that month's overall CPI increase.
That means Americans are still feeling significant price pressure at the gas pump, even though core inflation is considerably lower.
2. The job market showed renewed strength
The August employment report also gives the Fed a reason to consider tighter policy.
The U.S. added 162,000 nonfarm jobs in August, while the unemployment rate remained at 4.1%.
The August job gain was also substantially above the average monthly increase of 31,000 over the previous 12 months, according to the Bureau of Labor Statistics.
That is important because the Fed has two broad goals: maximum employment and stable prices.
A labor market that is holding up reasonably well allows policymakers to shift their full attention toward cooling persistent inflation.
But Why Might the Fed Keep Rates Unchanged?
The argument for a rate hike isn't one-sided.
The Fed also has reasons to be cautious.
Inflation isn't rising evenly
A significant part of the recent headline inflation pressure is connected to energy.
The Fed itself said in its July statement that inflation remained elevated relative to its 2% goal and noted that supply shocks, including energy, were contributing to price increases.
That's important because higher interest rates cannot directly produce more gasoline or energy supplies.
In simple terms, if oil prices rise because of a supply disruption, raising interest rates does not create more oil.
Core inflation has eased
Core CPI fell from 2.5% to 2.4% year-over-year between July and August. That's still above 2%, but it points in the direction the Fed ultimately wants.
The Fed therefore has to balance two risks:
• Raise rates too little: Inflation could remain stubborn.
• Raise rates too much: Higher borrowing costs could weaken hiring, investment and consumer spending.
That balancing act is why a Fed decision is never based on one economic number.
What Does the Producer Price Index Say?
Another number policymakers can watch is the Producer Price Index (PPI).
PPI measures prices received by producers and businesses rather than prices paid directly by consumers.
In August, the BLS reported that final-demand PPI increased 0.4% from July and was 5.4% higher than a year earlier.
Energy was a major contributor.
Final-demand goods prices increased 1.1% in August, with final-demand energy prices rising 4.2%. The BLS also reported that diesel and fuel prices jumped 24.1% during the month.
PPI does not automatically mean consumer prices will rise by the same amount. But it can provide useful information about price pressures moving through the production and supply chain.
Are Markets Expecting a September Fed Rate Hike?
Market pricing has shifted considerably as new economic data have arrived.
Recent market-based measures have put a quarter-point September hike among the most likely outcomes, but these probabilities can move quickly before the meeting.
That distinction is important:
Market expectations are not the same thing as a Federal Reserve decision.
• Financial markets ask, "What outcome does the market think is most likely?"
• The FOMC asks, "What monetary policy is appropriate based on our assessment of the economy?"
Those two answers can differ.
For that reason, readers should be careful with headlines claiming that a rate hike is already "certain," because it isn't.
What Would a 0.25% Fed Rate Hike Mean for Americans?
A quarter-point increase may sound small, but changes in the federal funds rate can influence many parts of the economy.
Borrowers
Homebuyers
• Mortgage rates do not move one-for-one with the federal funds rate. However, Fed policy can influence broader financial conditions and market expectations, which can affect mortgage rates.
• A Fed hike therefore does not automatically mean your mortgage rate will rise by exactly 0.25 percentage points.
Savers
• Higher interest rates can be beneficial for people holding certain savings products because banks and other financial institutions may offer higher yields.
• But the effect varies by account and institution.
Businesses
• Higher borrowing costs can make companies more cautious about taking on debt, expanding operations or making investments.
Stocks and bonds
• Financial markets can react immediately to Fed decisions because investors are constantly reassessing future interest rates, economic growth and corporate profits.
• But the market reaction depends not only on what the Fed does, but also on whether the decision was different from what investors already expected.
What If the Fed Holds Rates in September?
A decision to hold rates would mean the Fed keeps the target range at 3.50%–3.75%, assuming no other change to the target range.
That would not necessarily mean the Fed has finished fighting inflation.
It could instead mean policymakers want more evidence before making another move.
For example, officials could decide that inflation is gradually cooling and that maintaining the current level of rates gives monetary policy enough time to work.
Remember: monetary policy affects the economy with a lag. A decision made today does not instantly change prices, hiring or consumer spending tomorrow.
The Economic Numbers the Fed Will Be Watching
The September decision comes down to more than one report.
Here are several important pieces of the puzzle:
Inflation: August CPI was 3.4% year over year, while core CPI was 2.4%.
Employment: August payrolls increased by 162,000 and unemployment was 4.1%.
Producer prices: August PPI increased 5.4% over the year.
Current Fed policy: The federal funds target remains 3.50%–3.75%.
Inflation goal: The Fed continues to pursue price stability alongside maximum employment, with a 2% longer-run inflation goal.
Taken together, these numbers tell a complicated story: the labor market is holding up, inflation is still above target, core inflation has eased somewhat, and energy prices remain a major source of pressure.
So, Will the Fed Raise Rates in September 2026?
A September rate hike is a real possibility, but it is not guaranteed.
The strongest arguments for a hike are the still-elevated inflation rate, strong August payroll growth and the fact that three FOMC members already preferred a 25-basis-point increase at the July meeting.
The strongest arguments for waiting are the decline in core inflation, the role of energy and supply-related price pressures, and the risk that keeping policy restrictive for too long could eventually weaken the economy.
The answer will come on September 16 at 2:00 p.m. ET.
Until then, the best approach is not to treat market odds as a guarantee. Watch the actual economic data, the Fed's language and ultimately, the FOMC's official statement.
We don't predict the Fed. We explain the evidence behind its decision.
Frequently Asked Questions
When is the Fed's September 2026 meeting?
The September FOMC meeting is scheduled for September 15–16, 2026.
What time is the September 2026 Fed rate decision?
The FOMC decision is scheduled for 2:00 p.m. Eastern Time on September 16, 2026, followed by a press conference at 2:30 p.m. ET.
What is the current Fed interest rate?
The current federal funds target range is 3.50% to 3.75%.
Will the Fed raise interest rates in September 2026?
A 25-basis-point increase is a significant possibility based on the latest inflation and employment data, but the Federal Reserve has not announced the September decision yet.
Why does the Fed raise interest rates?
The Fed raise rates to make borrowing more expensive and reduce demand in the economy when inflation is too high. The goal is to help bring inflation back toward its longer-run 2% target while pursuing maximum employment.
Will a Fed rate hike increase mortgage rates?
Not necessarily by the same amount. Mortgage rates are influenced by many factors, including longer-term bond yields and financial-market expectations. A Fed hike can influence mortgage rates, but it does not automatically produce a matching 0.25-percentage-point increase.
What happens if the Fed keeps rates unchanged?
The federal funds target would remain at its current range, assuming no other policy change. A hold could signal that policymakers want more time to evaluate inflation, employment and economic growth before making another move.
Sources
This article relies primarily on official U.S. government sources, including the Federal Reserve and U.S. Bureau of Labor Statistics:
• Federal Reserve- September 2026 FOMC Calendar
• Federal Reserve- July 2026 FOMC Statement
• BLS- August 2026 Employment Situation
• BLS- August 2026 Consumer Price Index
• BLS- August 2026 Producer Price Index