September 16, 2026. The Federal Open Market Committee raised the federal funds rate by a quarter point to 3.75%–4.00% — the first hike since July 2023, and the first under Chair Kevin Warsh. The vote was 12–0. Six weeks earlier the same committee held 9–3, with every Board governor on the hold side.

The statement is short. The press conference was shorter on what comes next. Warsh said he is not in the forward guidance business. That is the opposite of how Jerome Powell used to talk. The inflation that forced the move is still the household kind: shelter, services, and energy that will not sit still.

The vote: 12–0 now, 9–3 in July

The FOMC has 12 voters: seven Board governors plus five regional presidents. Yesterday every one of them voted to hike. Official statement: Federal Reserve, September 16, 2026.

Compare that with July 29:

  • July 29: 9–3 hold at 3.50%–3.75%. The 9 votes to hold were the 7 Board governors (Chair Warsh, Barr, Bowman, Cook, Jefferson, Powell, Waller) plus 2 presidents (Williams of New York and Paulson). The 3 votes to hike were all regional presidents: Beth Hammack (Cleveland), Neel Kashkari (Minneapolis), and Lorie Logan (Dallas). No governor voted to raise rates in July.
  • September 16: 12–0 hike of 0.25 percentage point to 3.75%–4.00%, effective September 17. Same 12 people. The 9 who held in July flipped; the 3 presidents who already wanted a hike did not need to. That is how 9–3 becomes 12–0.

That is the story inside the building: not a close call this time. Markets had priced a better-than-90% chance of a hike after August CPI. The surprise is the unanimity, not the 25 basis points.

Warsh vs. Powell on forward guidance

Asked whether another hike is coming this year, Warsh refused to sketch a path. He said he does not engage in providing forward guidance and will not prejudge future decisions. He has not submitted his own dot on the SEP grid since becoming chair. The post-meeting statement has no “additional adjustments” language — only “The Committee will deliver price stability.”

That is a deliberate break with Jerome Powell. Powell spent years translating the dots in real time: “if the economy evolves as expected,” “sufficiently restrictive,” “higher for longer,” then the 2024 turn toward cuts. In 2021 the Committee’s calendar-style guidance — taper first, hikes later — helped delay the response until inflation was already at 40-year highs. Warsh said as much at Jackson Hole on August 28: routine forward guidance “has overstayed its welcome,” can create “ambiguity in the name of clarity,” and “might well have slowed the policy response to high inflation” in 2021.

Powell used the press conference to tell you the base case. Warsh used it to tell you there is no base case he will commit to. The dots still exist — 16 of 18 participants (Warsh is the missing 19th by choice) see at least one more quarter-point by year-end, and four of those see two. Two participants would stop here. Warsh will not bless that path out loud. Markets have to read incoming CPI, PPI, and the labor market instead of the chair’s adjectives.

What he would say: inflation has been “too high … for too long.” Summer readings “do not tell me that underlying trends have meaningfully improved.” The FOMC’s test — that underlying inflation is moving to 2% “clearly and at sufficient speed” — “has not been satisfied.” He added he would be “hard pressed to describe broad financial conditions as restrictive,” so yesterday “removed a dose of accommodation.” Strong activity, still-high inflation, and Middle East risk, he said, “lend themselves to a firm unanimous decision.”

What is still sticky

A 25bp hike does not reprice rent, insurance, or a gallon of diesel this week. It is aimed at the pieces of inflation that have stopped falling — and the energy shock that is leaking back into everything else.

Shelter

August CPI shelter rose 0.3% on the month and 3.0% over the year (BLS, released September 11). Rent and owners’ equivalent rent each rose 0.2% in August. Hotels jumped 2.4% after a July drop. Shelter is no longer the 2022 blowout, but it is not giving the Fed more disinflation. People who cannot buy at 7%+ mortgages stay in the rental market. See Rent vs Buy.

Services outside the apartment

Core CPI (ex food and energy) rose 0.3% in August, 2.4% over the year. Headline CPI was +0.4% MoM / 3.4% y/y. The sticky core is services. Super-core services (ex shelter and energy services) ran hot — on the order of 0.5% on the month and about 3% over the year. Airline fares are up 23.4% over 12 months. Education, recreation, personal care, in-home care, and daycare are still climbing. Those are wage-and-staffing prices. Rate hikes hit them slowly, if at all. Track the split on Inflation by Category and What's Inflated.

Energy — not “core,” still in the cart

Gasoline jumped 3.9% in August and accounted for more than a third of the monthly CPI increase. The energy index rose 2.1%. Wholesale confirmed it: August PPI rose 0.4% with energy +4.2% and goods +1.1%. California diesel hit a record $7.91 the same week — 70% above January at the pump. The Fed usually “looks through” oil. Warsh’s committee decided this shock has lasted long enough to risk second-round effects. Pump prices: Gas tracker.

What actually cooled

Not everything is sticky. Motor vehicle insurance fell 0.8% in August and is down about 5% over the year — a rare break after years of premium shock. Medical care ticked down 0.2% on the month. Core goods were only about +0.1%. The problem is not TVs. It is housing, care work, travel, and fuel.

The Fed’s own forecast

The September Summary of Economic Projections nudged 2026 headline PCE to 3.7% and core to 3.4% — both a tenth higher than June. Officials do not see inflation back at 2% until 2029. Unemployment was marked down to 4.1%. That mix — solid jobs, sticky prices — is why they hiked instead of waiting.

What it means for households

  • Mortgages: The funds rate is not the 30-year. Mortgage News Daily had 30-year fixed near 7.19% going into the meeting — already up about 38bp since Warsh’s Jackson Hole speech. A unanimous hike does not lower that. It argues the next print stays high.
  • Credit cards, HELOCs, auto loans: Prime moves with the funds rate. A 25bp hike is an immediate repricing for variable debt. No Powell-style “we are done” hedge in the press conference.
  • Savings / CDs: Cash yields should tick up with the new 3.75%–4.00% range, not roll over.
  • The grocery and freight channel: Diesel and wholesale energy are how this hike collides with the cart. Rates do not cut the Iran premium. They try to stop it from embedding in rents and wages. Related: insurance shock, childcare.

FAQ

Did the Fed hike rates on September 16, 2026?

Yes. A quarter point, to 3.75%–4.00%, effective September 17. First increase since July 2023.

How did the vote compare with July?

July was 9–3 to hold. All seven governors voted to hold; three regional presidents wanted a hike. September was 12–0 to hike. Every governor voted yes.

Did Warsh say another hike is coming?

No. He said he is not in the forward guidance business and will not prejudge the next meeting. The other officials’ dots imply one more hike this year. He did not.

Will this lower inflation quickly?

No. Shelter, services, and energy are the sticky pieces, and they move on their own clocks. A hike raises borrowing costs. It does not reprice last month’s diesel or this month’s rent.

Bottom line

September 16 was the hike July’s dissenters wanted, delivered unanimously once August CPI and wholesale energy refused to cool. Warsh got the vote without giving Powell’s usual map of the next six months. For households, the news is 25bp more on variable debt, mortgages already above 7%, and the same sticky list as last month: rent, care, fares, and fuel.

Sources: FOMC statement, September 16, 2026; CNBC; Reuters; Warsh, Jackson Hole, August 28, 2026; BLS CPI, August 2026; July 29 FOMC recap (9–3 roster from the July statement). Related: August PPI, inflation by category.