During two days of closed-door meetings, members of the Federal Open Market Committee (FOMC) revised their economic projections for the United States. According to the median of the estimates, annualized inflation in 2026 is projected to reach 3.7%, a figure higher than the 3.6% projected at the June meeting.
Members also believe that benchmark rates should be between 4% and 4.25% by the end of the year. This level represents a degree higher than what was announced on the day, following the decision to raise rates by 25 basis points. The median set for the end of this year and for 2027 was 4.1%, reported the Fed's leader.
Kevin Warsh observed that inflation has remained above the mandate for five years, emphasizing that it 'has been very high for a long time.' He added that the Fed does not have the capacity to influence specific prices but can work to prevent increases from 'spreading throughout the economy.'
The Fed president declared that the decision to raise rates was entirely internal, decoupling it from any market influence. In a statement, the Fed announced that it increased interest rates by 25 basis points, raising the range to between 3.75% and 4%, after the two-day meeting.
The official note indicated that the FOMC determined that inflation remains 'elevated' and exceeds the Fed's 2% target, with this decision being made unanimously. It is relevant to note that the Fed had not changed the benchmark rates, which guide borrowing costs, since the summer of 2023.
Inflation has been a determining factor in the central bank's interest rate policy throughout the year, driven by the conflict between the US and Iran and the resulting impact on the global oil supply.