The Fed Raised Rates to 3.75-4% and Its Own Projections Point to One More

The Federal Reserve lifted its target range to 3.75-4% on 16 September 2026, its first rise since 2023, and its median projection sees 4.1% by year-end.

The Federal Open Market Committee raised the target range for the federal funds rate by a quarter point to 3.75-4% on 16 September 2026, the first increase since 2023. The vote was 12-0. For anyone financing property, the more consequential number sits in the projections published alongside it: the median FOMC participant now sees the policy rate at 4.1% at the end of 2026, which from the new range implies one more quarter-point step before the year closes.

What the statement says, and what it leaves out

The reasoning runs to a few sentences. "Economic activity is expanding at a solid pace," the Committee wrote, pointing to resilient domestic spending, strong productivity growth and robust capital investment. "Job gains have kept pace with the workforce, and the unemployment rate has changed little." Then the operative line: "Inflation remains elevated. Today's policy action will support a timelier return to the Committee's 2 percent goal."

Housing is not mentioned once. That is worth saying plainly, because it sets the terms of everything that follows: this is an inflation decision, and the property market is a channel the decision travels through rather than a target it aims at. The administered rates move with it from 17 September. Interest on reserve balances goes to 3.90%, the primary credit rate to 4.0%, and the overnight reverse repurchase offering rate to 3.75%.

The projections do more work than the move

The Summary of Economic Projections puts the median federal funds rate at 4.1% for the end of 2026, 4.1% again for the end of 2027, 3.9% for 2028 and 3.2% in the longer run. Median PCE inflation is 3.7% this year and 2.3% next, with core PCE at 3.4% and 2.5%. Real GDP growth is 2.3% and unemployment 4.1% for 2026.

Read as a path rather than a set of points, that is a plateau. The same 4.1% for two consecutive year-ends says the Committee expects to reach a level and sit on it, not to reach it and reverse. Someone weighing a fixed mortgage rate against a floating one is choosing against a flat line, not a peak.

The arithmetic on an American purchase

Our own United States row, taken on 4 September 2026 and rated High confidence, puts the national average at $2,433 per square metre with a gross rental yield of 6.71%. After the effective 10.66% tax on rental income in our standardised non-resident case, that leaves 5.99% net. Transaction costs run to 6.9% of the purchase price, among the lowest anywhere in our coverage and low enough that the American market tolerates shorter holding periods than most.

Set that against the policy rate and a tension appears. Prices in our series are 2.2% higher than a year ago; the target range is now 3.75-4%. Nominal house price growth below the risk-free rate is not the usual state of an American housing cycle. The gross yield is what has to cover the difference, and at 6.71% it still does, which is much of why the United States reads as moderate at 57 on our Bubble Risk scale despite ten-year price growth of 85.2%.

The question the decision actually poses

None of this is advice on whether to buy or to borrow, and projections are projections; the Committee's have been wrong before in both directions. What this release does fix is the question worth asking about American property this autumn. Not where rates peak, but how long they stay where they are.

Sources: Federal Reserve https://www.federalreserve.gov/newsevents/pressreleases/monetary20260916a.htm; Federal Reserve Summary of Economic Projections https://www.federalreserve.gov/monetarypolicy/fomcprojtabl20260916.htm; Federal Reserve implementation note https://www.federalreserve.gov/monetarypolicy/files/monetary20260916a1.pdf

Market data: Miami (metro area) · United States · Texas