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Federal Reserve Raises Rates, First Time Since 2023

businessSep 19, 2026·295 words·3 min read

The US Federal Reserve, the country's central bank, raised interest rates on Wednesday for the first time in more than three years. All members voted for the decision, which lifted its main rate by a quarter of a percentage point, to between 3.75% and 4%. The Fed had not raised rates since July 2023, and its last change was a cut in December 2025. Fed Chair Kevin Warsh said inflation was "too high" and had been "for too long".

Inflation means that prices are going up. In the US, prices have risen faster than the Fed's 2% target for more than five years. In August, inflation was 3.4%. One big reason is the war with Iran, which started in February and made oil and gasoline more expensive. President Donald Trump wanted lower rates, and after the decision he called the Fed's board "hostile".

Higher rates make borrowing more expensive. Some big banks quickly raised their lending rate to 7%, so credit cards and loans now cost more. The average rate for a 30-year home loan, called a mortgage, had already risen to 6.95%, the highest since January 2025. Higher mortgage rates can add hundreds of dollars a month to a buyer's costs. But people who save money may earn more. Most Fed officials expect one more rise this year.

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