△ Federal Reserve (data chart)

On September 16, U.S. time, the Federal Reserve announced an increase of 25 basis points in the target range for the federal funds rate, raising the benchmark rate from 3.50% to 3.75% to a range of 3.75% to 4%.

This marks the Federal Reserve’s first interest-rate hike in more than three years, since July 2023. In its policy statement, the Federal Reserve noted that, due to persistent inflationary pressures and sustained global energy price increases stemming from geopolitical conflicts, current monetary policy remains insufficient to bring inflation back down to the 2% target.

Recent rises in energy prices and U.S. Treasury yields have placed significant pressure on the Federal Reserve, as market expectations for interest rate hikes continue to intensify.

The Federal Reserve’s Summary of Economic Projections released that day showed that Fed officials slightly raised their forecasts for this year’s inflation and economic growth, while the median forecast for this year’s unemployment rate was lowered from 4.3% in June to 4.1%. The median forecast for the federal funds rate this year has risen from 3.8% in June to 4.1%, while the median forecasts for the federal funds rate in 2027 and 2028 have each increased by 50 basis points.

On the 16th, Federal Reserve Chairman Wash stated that the Fed’s primary focus is on price stability, and that U.S. inflation remains elevated, with high inflation persisting for an extended period. The Federal Reserve cannot influence oil and food prices, but what it can and will do is ensure that price increases do not become entrenched.

In addition, the Federal Reserve’s dot plot shows that among the 18 Fed officials, 12 expect another 25-basis-point rate hike this year; four anticipate two rate hikes; and two do not foresee any further increases.

From March 2022 to July 2023, the Federal Reserve raised interest rates 11 times in response to the high inflation that emerged after the COVID-19 pandemic. As the economy cools, the Federal Reserve shifted to implementing six rate cuts from September 2024 to December 2025, while choosing to hold rates steady for five consecutive times from January to July this year.