The Excuse Expires & The Fed Stops Waiting

In April, the Federal Reserve was prepared to wait. By September, it was not. On September 16, 2026, the Federal Open Market Committee raised the target bracket for the federal funds rate by a quarter of a percentage point, to 3.75 to 4 percent.¹ In April, it had held the range at 3.50 to 3.75 percent and promised only to “carefully assess incoming data.”²

The vocabulary changed more than the rate. April’s statement dwelt on “a high level of uncertainty” arising from the Middle East and blamed inflation partly on “global energy prices.”³ September’s states simply that “[i]nflation remains elevated,” with no mention of energy, and ends with a sentence central bankers usually avoid: “The Committee will deliver price stability.”⁴ In April, it had been merely “strongly committed.”⁵ Central banks seldom use the future indicative. When they do, bondholders should take note.

The case for the increase is a textbook one. By the Committee’s own account, activity “is expanding at a solid pace,” productivity growth “is strong,” and unemployment “has changed little.”⁶ A growing economy with steady employment and inflation above 2 percent leaves little to deliberate. The novelty lies not in the decision but in the plainness of its explanation.

The Committee’s statement follows, in relevant part.

“The Committee decided to raise the target range for the federal funds rate by 1/4 percentage point to 3-3/4 to 4 percent, in support of the Federal Reserve’s dual mandate. The Committee is continuing its policy of maintaining ample reserves in the banking system.
Economic activity is expanding at a solid pace. While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient. Productivity growth is strong, and capital investment is robust. Job gains have kept pace with the workforce, and the unemployment rate has changed little.
Inflation remains elevated. Today’s policy action will support a timelier return to the Committee’s 2 percent goal. The Committee will deliver price stability.”⁷

¹ Press Release, Bd. of Governors of the Fed. Reserve Sys., Federal Reserve Issues FOMC Statement (16 Sept. 2026), https://www.federalreserve.gov/newsevents/pressreleases/monetary20260916a.htm [hereinafter September Statement].
² Press Release, Bd. of Governors of the Fed. Reserve Sys., Federal Reserve Issues FOMC Statement (29 Apr. 2026), https://www.federalreserve.gov/newsevents/pressreleases/monetary20260429a.htm [hereinafter April Statement].
³ Id.
⁴ September Statement, supra note 1.
⁵ April Statement, supra note 2.
⁶ September Statement, supra note 1.
⁷ Id.