Fed lifts rates 25 bps to 3.75%–4.00%, most officials see another hike in 2026
Macro & Markets ·
The Federal Open Market Committee voted 12–0 to raise the federal funds rate target, signaling more tightening ahead even as it flagged elevated geopolitical uncertainty.
The Federal Reserve's rate-setting committee unanimously approved a 25 basis point increase, moving the target range to 3.75%–4.00%, according to a report on wublockchain.xyz. The central bank said it would continue maintaining ample reserves in the banking system alongside the hike. In its statement, the FOMC characterized the economy as expanding at a solid pace, with resilient domestic spending, strong productivity growth and capital investment, and a broadly stable labor market.
The committee explicitly cited elevated uncertainty tied in part to geopolitical developments, alongside inflation that remains above target. Officials framed the rate increase as intended to support a timelier return to the Fed's 2% inflation goal, suggesting policymakers view current price pressures as insufficiently contained despite the broader economic resilience described in the statement.
Forward guidance embedded in the decision points to continued tightening. Wall Street Journal reporter Nick Timiraos reported that 16 of 18 FOMC participants projected at least one additional rate increase in 2026, with few officials expecting rates to fall below 4% by the end of 2027. That distribution indicates a committee largely aligned on the need for further hikes rather than an imminent pivot toward cuts.
The decision stands in sharp contrast to public pressure from President Trump, who has called for rate cuts to 1% or lower — a reduction of roughly 300 basis points that would be three times larger than the biggest single-meeting cut in U.S. history. The gap between that demand and the Fed's actual trajectory, which points toward higher rates rather than lower ones, underscores a widening divergence between political rhetoric and the central bank's stated policy path.
What remains unresolved is how the Fed will weigh the geopolitical uncertainty it flagged against its inflation mandate in subsequent meetings, and whether the 2026 hike projected by most officials arrives as a single move or the start of a longer cycle. Market reaction to the tightening bias, particularly across risk assets, will be a key indicator of how the divergence between political pressure and committee guidance plays out in coming months.