Fed delivers first rate hike since July 2023, lifts benchmark to 4%

September 16, 2026 (MLN): The U.S. Federal Reserve raised its benchmark interest rate by 25 basis points to 4% from 3.75% on Wednesday, marking the central bank’s first rate hike since July 2023 amid persistent inflation and high oil prices.

During its two-day Federal Open Market Committee (FOMC) meeting, the Fed decided to increase interest rates despite U.S. President Donald Trump’s calls for lower borrowing costs.

The decision comes as persistent inflation and elevated oil prices continue to weigh on the U.S. economic outlook.

Trump has also threatened to stop trading with countries running trade surpluses with the United States unless the Federal Reserve lowers interest rates.

The FOMC statement was approved by a 12-0 vote. Alongside the rate hike, the Fed raised the interest rate paid on reserve balances to 3.90% and the primary credit rate to 4.0%, both effective September 17.

The Committee also set the standing overnight repo rate at 4.0% and the standing overnight reverse repo offering rate at 3.75%, with a per-counterparty limit of $160 billion a day.

On its balance sheet, the Fed will continue rolling over maturing Treasury holdings at auction and reinvesting proceeds from agency securities into Treasury bills, while remaining ready to buy short-dated Treasuries if needed to keep reserves ample.

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