Most Federal Reserve officials expect to raise interest rates once more before the end of 2026, according to the minutes of the September 15 and 16 policy meeting that the central bank released Wednesday afternoon. The Board of Governors published the record at 2:00 p.m. Eastern on October 7, three weeks after the decision, following its usual schedule. The minutes document a unanimous 12 to 0 vote to lift the target range for the federal funds rate by a quarter percentage point to 3.75% to 4.00%, effective September 17, with no dissents recorded. That move carried the bank prime loan rate to 7.00%, where it has remained since, and where the current prime rate still sits today. What the minutes add to September’s one-page announcement is the Committee’s own account of how close it stands to another increase. Most participants expected that a further increase would likely be appropriate by year-end, the record says, and several judged the current policy rate to be not restrictive or only mildly restrictive. Only two meetings remain on the 2026 calendar, October 27 and 28 and December 8 and 9, so “by year-end” points to one of those two dates. The minutes also show the Committee acting on an inflation estimate that the government’s own data later revised lower. For borrowers, the practical question is whether prime reaches 7.25% within the next eleven weeks. Our Fed meeting schedule tracks both remaining dates.
Key Takeaways
- The Fed voted 12 to 0 in September to raise its target range a quarter point to 3.75% to 4.00%.
- Minutes released October 7 show most participants expect another increase would likely be appropriate by year-end.
- Fed staff estimated August core PCE inflation at 3.4%. The BEA later reported 3.0% for that month.
- Several participants judged the current policy rate not restrictive or only mildly restrictive.
- Prime stands at 7.00% and would reach 7.25% after one more quarter-point increase.
Table of Contents
What the September Minutes Added
The September statement told markets what the Committee did. The minutes tell them what the Committee thinks happens next. On the forward path, the record is more direct than the statement was. Most participants expected that another increase in the target range would likely be appropriate by year-end, and all participants supported the quarter-point move they had just made. Several went further and described the policy rate as not restrictive, or only mildly so, which is the language of officials who believe they have more work ahead rather than a cycle to defend. The Committee also repeated that future decisions would depend on incoming data, the standard caveat that keeps either remaining meeting live.
On inflation, the Committee stated plainly that it remains elevated and that participants had not seen sufficient progress in bringing it down. Officials pointed to a mix of pressures outside the Fed’s control, including conflict in the Middle East, spending tied to artificial intelligence buildouts, and the lingering pass-through of earlier tariffs. On the labor side, the minutes describe an unemployment rate that has changed little, at 4.1% in both July and August, with participants judging the market stable and close to maximum employment. A majority said it had strengthened somewhat in recent readings. Firm prices alongside steady employment gave the Committee room to tighten without the usual objection that it risks the second half of its mandate.
A Unanimous Vote With an Open Question
Twelve members voted, and all twelve voted yes. The roster was Kevin Warsh, John C. Williams, Michael S. Barr, Michelle W. Bowman, Lisa D. Cook, Beth M. Hammack, Philip N. Jefferson, Neel Kashkari, Lorie K. Logan, Anna Paulson, Jerome H. Powell, and Christopher J. Waller. A clean 12 to 0 is notable on a Committee that split three ways earlier this year, and it signals that the case for September’s quarter point was not seriously contested inside the room.
Unanimity on the decision taken, though, is not the same as agreement on the decision ahead. Eighteen participants submitted economic projections at the meeting, and the minutes report that most saw a further increase as likely appropriate by year-end without committing to a month. The record also captures the mechanical side. Interest on reserve balances rose to 3.90% and the primary credit rate to 4.00%, the two administered rates that anchor the new range in practice. The Open Market Desk paused reserve management purchases, with reserves judged to remain consistent with ample supply. Staff projections do not have inflation returning to the 2% target until 2029.
The Inflation Estimate That Moved After the Vote
The most consequential number in the minutes is one that has since changed. At the time of the meeting, Fed staff estimated that total personal consumption expenditures inflation ran at 3.8% over the twelve months through August, with core inflation at 3.4%. Under the Bureau of Economic Analysis methodology introduced this year, staff put the same figures at 3.6% and 3.2%. Those were the readings in front of the Committee on September 16. The actual August report did not arrive until September 30, and it came in softer. The BEA reported headline PCE inflation at 3.4% for August, four tenths of a point below the staff estimate the Committee had used, with core at 3.0%.
Nothing about that gap makes the September decision wrong, and the Committee had other reasons for moving. It does mean the inflation picture the minutes describe is a shade warmer than the picture officials have now. The labor data moved too. September payrolls grew 29,000 and unemployment ticked up to 4.2%, according to the Bureau of Labor Statistics report published October 2, against the 4.1% that the minutes record for July and August. A softer inflation print and a slightly looser labor market both argue for patience, which is the tension the October meeting has to resolve. Track the monthly series on our inflation tracker, and see how the policy rate has moved on the Fed prime rate page.
What Another Hike Would Do to Your Rates
Prime is the number that reaches household credit fastest. Banks set it by convention at 300 basis points above the top of the federal funds target range, which is why the September move to 3.75% to 4.00% produced a 7.00% prime the following day. Another quarter point would take prime to 7.25%. Most variable-rate credit cards are priced as prime plus a margin, so that increase passes through within one or two statement cycles without any action by the issuer. On a $10,000 revolving balance, a 25 basis point step adds roughly $25 of interest over a year. Home equity lines of credit follow the same index on a similar lag. Our guide to how the Fed affects loans walks through each product.
Fixed-rate borrowing works differently. The 10-year Treasury yield stood at 5.27% on October 6, and mortgages track that yield and the spread above it rather than the funds rate, so current mortgage rates can move against the Fed in a given week. Savers sit on the other side. The spread between the best high-yield savings accounts and the average bank remains wide, because deposit rates rise slowly even when policy rates do not, and CD rates let you lock a yield before any eventual turn. The 2-year to 10-year spread stood at 51 basis points on October 7.
Pro Tip
If you carry a variable balance, find the index and margin printed in your cardholder agreement before the October meeting, not after it. Prime at 7.00% plus a 16 point margin is a 23.00% APR, and a quarter-point move makes it 23.25%. Knowing your margin tells you exactly what the next decision costs you, and it is the number to quote when you call to ask for a lower rate or move a balance to a fixed-rate product.
Frequently Asked Questions
Will the Fed raise interest rates again in 2026?
Most Fed officials expect one more quarter-point increase by year-end, according to the September meeting minutes released October 7. Two meetings remain, on October 27 and 28 and on December 8 and 9. The Committee has not committed to either date.
What is the prime rate now, and what would it be after another hike?
The bank prime loan rate is 7.00%, as reported in the Federal Reserve’s H.15 release for October 6. Prime is set by convention at 300 basis points above the top of the federal funds target range, currently 4.00%. If the Committee raises the range another quarter point, banks would move prime to 7.25% within a day or two of the decision. That is the figure that matters for credit cards and home equity lines, because both are indexed to prime rather than to the funds rate itself.
When is the next Fed meeting?
The Federal Open Market Committee next meets on October 27 and 28, 2026, with the decision announced at 2:00 p.m. Eastern on the second day. The final meeting of the year falls on December 8 and 9 and carries a Summary of Economic Projections, which includes the dot plot showing where each participant expects rates to go. Minutes for each meeting appear three weeks later. Because most participants pointed to a further increase by year-end, both dates remain candidates for the next move.
Why did the Fed raise rates if inflation came in lower than expected?
The Committee voted on September 16 using staff estimates, not the final report. Those estimates put August headline PCE inflation at 3.8% and core at 3.4%. The Bureau of Economic Analysis published the actual August figures on September 30, two weeks later, showing headline inflation at 3.4% and core at 3.0%. The decision was already made by then. Officials also cited pressures they expected to persist, including Middle East conflict, spending on artificial intelligence capacity, and earlier tariffs, and said they had not seen sufficient progress on inflation.
How soon would my credit card APR change after a Fed hike?
Usually within one or two billing cycles. Variable-rate cards are priced as the prime rate plus a fixed margin, and the agreement typically lets the issuer apply the new prime at the start of the next cycle without notifying you separately. Prime itself moves within a day or two of an FOMC decision. A quarter-point increase on October 28 would most likely appear on a November or December statement. Fixed-rate cards require advance written notice before a rate change, which makes them slower to reprice.
Does a higher federal funds rate help my savings account?
It helps, but slowly and unevenly. Banks raise deposit rates far more gradually than they raise lending rates, a pattern often described as low deposit beta, and large institutions with ample funding raise them least. Online banks competing for deposits move faster, which is why the gap between the top high-yield savings accounts and the national average stays wide through a tightening cycle. Certificates of deposit behave differently again, letting you fix a yield for a set term before rates eventually turn lower.
Watching the October Meeting
Two inflation reports land before October 27: September CPI and the September PCE print that will test whether the softer August figure marked a turn or a pause. If inflation keeps easing while payroll growth stays near 29,000, the patient camp inside the Committee gains ground and prime holds at 7.00% into December. If prices firm again, the year-end increase the minutes describe arrives this month. Our Fed rate forecast tracks the probabilities, and the interest rate and Treasury yield curve pages update daily.
References
- Board of Governors of the Federal Reserve System, Minutes of the Federal Open Market Committee, September 15 to 16, 2026, released October 7, 2026.
- Board of Governors of the Federal Reserve System, Press release announcing the September FOMC minutes, October 7, 2026.
- Board of Governors of the Federal Reserve System, H.15 Selected Interest Rates, released October 7, 2026, for October 6 values.
- Board of Governors of the Federal Reserve System, FOMC Meeting Calendars, 2026 and 2027.
- U.S. Bureau of Economic Analysis, Personal Consumption Expenditures Price Index, August 2026, released September 30, 2026.
- U.S. Bureau of Labor Statistics, The Employment Situation, September 2026, released October 2, 2026.
- Federal Reserve Bank of St. Louis, 10-Year Minus 2-Year Treasury Spread (T10Y2Y), October 7, 2026.
- Federal Reserve Bank of St. Louis, Market Yield on 10-Year Treasury Securities (DGS10), October 6, 2026.
