Overview
- The Fed raised its policy rate by 25 basis points to a 3.75%–4.00% target range in mid‑September, the first increase since 2023.
- Chair Kevin Warsh and other officials have said they are willing to raise rates again if data show inflation stays too high and have framed policy as data driven rather than preannounced.
- The Fed is changing how it talks to markets by using shorter statements and relying on market moves and public comments to shape financial conditions instead of explicit forward guidance.
- Markets and fed‑funds futures quickly priced in further hikes, Treasury yields rose and many investors shifted money toward bonds, while equity strategists warned of a near‑term pullback in stock prices.
- Policymakers project core inflation will stay above 2% for several years and say they aim to slow price growth without sharply raising unemployment; upcoming reports on consumer prices, jobs and manufacturing orders will determine whether the Fed tightens further.