Direct answer: The Federal Reserve raised US interest rates by 0.25 percentage points to 3.75%–4.00% on Wednesday 16 September 2026 — its first increase since July 2023 — on a unanimous 12–0 vote. Updated projections show 16 of 18 policymakers expect at least one further rise before the end of the year. The next Fed interest rate decision is 28 October 2026. For the sterling leg, see our GBP/USD forecast.
What Did the Fed Decide on 16 September 2026?
The Federal Open Market Committee voted 12–0 to raise the federal funds target range by a quarter point to 3.75%–4.00%, announced at 2:00 PM US Eastern Time on 16 September 2026. It is the first rate rise since July 2023 and the first of Chair Kevin Warsh’s tenure.
The statement was unusually short. It described economic activity as expanding at a solid pace, noted that productivity growth is strong and capital investment robust, and said job gains have kept pace with the workforce. On inflation it was blunt: prices remain elevated, the action supports a timelier return to the 2% goal, and the committee “will deliver price stability”.
In the accompanying implementation note, the Board raised the interest rate on reserve balances to 3.90% and the primary credit rate to 4.00%, both effective 17 September 2026 (Federal Reserve implementation note).
What Is the Current US Interest Rate?
The current US federal funds target range is 3.75%–4.00%, effective 17 September 2026. It had been held at 3.50%–3.75% since December 2025, following three quarter-point cuts in September, October and December of that year.
The federal funds rate is the anchor for US borrowing costs, and because the dollar sits on one side of most traded currency pairs, it is the single most influential interest rate in global FX. You can check what that means for your own conversion on our live currency converter.
How Many More Rate Rises Does the Fed Expect?
Sixteen of the 18 participants in the September Summary of Economic Projections pencilled in at least one further quarter-point rise by the end of 2026, and four expect two. The median projection for the policy rate at end-2026 is 4.1%, up from 3.8% in June.
| End-2026 policy rate (midpoint) | Participants | What it implies from here |
|---|---|---|
| 4.375% | 4 | Two further 0.25-point rises |
| 4.125% | 12 | One further 0.25-point rise |
| 3.875% | 2 | No further change this year |
The detail worth dwelling on sits one year further out. The median dot for end-2027 is also 4.1% — identical to end-2026. The median participant is not forecasting a single cut across the whole of next year. More striking still, the number of participants placing the rate at 4.375% rises from four in 2026 to eight in 2027, so a meaningful bloc now sees policy tighter at the end of next year than at the end of this one. Earlier projection rounds carried an easing path; this one does not.
The longer-run median also drifted up, from 3.1% in June to 3.2%. That is a small number with large consequences: it is the committee’s estimate of where rates settle once shocks have passed, and it feeds directly into how forward points are priced on any forward contract involving dollars.
Why Did the Fed Raise Rates?
Two things in the projections explain the move better than the statement does.
Inflation risk is now near-unanimous. Seventeen of 18 participants judged the risks around their PCE inflation forecasts to be weighted to the upside. The median forecast for headline PCE inflation in 2026 was revised up to 3.7%, with core PCE at 3.4% — both higher than the June round, and both well above the 2% target.
The labour-market objection disappeared. In June, seven participants saw risks to unemployment weighted to the upside. In September, not one did: 17 called them broadly balanced and a single participant saw them to the downside. The median unemployment forecast for both 2026 and 2027 was cut from 4.3% to 4.1%. Growth was revised up too, to 2.3% this year and 2.4% next.
Put together: a committee that thinks inflation is more likely to surprise higher, and no longer believes tightening costs it much in jobs. That combination is what produced a 12–0 vote rather than the divided outcomes seen earlier in the year (Federal Reserve, Summary of Economic Projections, 16 September 2026).
When Is the Next Fed Interest Rate Decision?
The next Federal Reserve interest rate decision is on Wednesday 28 October 2026, at the end of a two-day meeting running 27–28 October. It is announced at 2:00 PM US Eastern Time, which falls at 6:00 PM UK time on that date, because British Summer Time ends on 25 October while US clocks do not change until 1 November. The October meeting does not carry updated projections; the December one does.
Remaining FOMC meeting dates for 2026:
- 27–28 October — next decision, announced 28 October (no projections)
- 8–9 December — announced 9 December (updated projections and dot plot)
2026 decisions so far: 28 January, 18 March, 29 April, 17 June and 29 July all held the range at 3.50%–3.75%; 16 September raised it to 3.75%–4.00%. Dates are confirmed on the FOMC meeting calendar.
How Did the Dollar React to the Fed Decision?
The quarter-point rise itself was heavily priced in beforehand, so the dollar’s move came from the projections rather than the rate. In the hours after the announcement on 16 September, GBP/USD traded near 1.3385 and EUR/USD near 1.1470, each roughly 0.6% weaker against the dollar on the day, with the dollar index pushing back toward 100 — its firmest since late July.
That is the classic pattern around a well-telegraphed meeting: the decision does little, the path does the work. A dot plot showing no cuts through 2027 lengthens the period over which dollar assets out-yield sterling and euro assets, and that is what currency markets price. Rates move constantly — check the live rate on your amount rather than relying on a figure in an article.
For where this may leave the major dollar pairs over the coming quarters, see our US dollar forecast for 2026 and the EUR/USD outlook.
What the Fed’s Rate Rise Means for Your Currency Transfer
A firmer dollar raises the sterling cost of buying dollars and lowers the sterling value of converting dollars back. The proportions matter more than the pip count.
Illustrative example: a UK business paying a $500,000 invoice at an illustrative 1.3525 spends about £369,700. At an illustrative 1.3385 the same dollars cost roughly £373,600 — about £3,900 more from a 1.4-cent move. Scale that: every 1% move in GBP/USD changes the sterling cost of a $500k payment by around £3,700. On a $2 million programme of payments across a year, a 3% drift is roughly £44,000.
Where this bites hardest:
- UK importers paying US suppliers. A tightening Fed raises your input cost in sterling without anything changing in the contract — see our guidance for importers and exporters and the options set out in FX hedging strategies.
- Anyone buying US property or moving large sums into dollars. Dollar strength cuts purchasing power at the point of completion — our guide to sending money to the USA from the UK covers the mechanics.
- Gulf transfers. The UAE dirham is pegged to the dollar at 3.6725 and the Saudi riyal at 3.75, so Fed policy passes almost directly into GBP/AED and GBP/SAR. See sending money to the UAE.
Because markets price expected decisions before they happen, waiting for a meeting often means the move has already occurred. Clients commonly fix a rate ahead of a scheduled announcement, split a large sum either side of it to average the outcome, or set a limit order at a target level so the trade executes without being watched.
The Bank of England Decides on 17 September
Sterling faces its own test within 24 hours. The Bank of England’s Monetary Policy Committee announces at 12:00 UK time on Thursday 17 September 2026, having held Bank Rate at 3.75% on 30 July in a divided 6–3 vote (Bank of England).
The order matters for GBP/USD. Sterling has already absorbed the dollar leg of the move; the UK leg arrives next, into a market that has just been told the Fed sees no cuts for over a year. Two central bank announcements inside a single trading day is the kind of window in which GBP/USD can travel several cents. Our next Bank of England interest rate decision page covers the UK side, and the currency forecasts hub tracks the pairs together.
Frequently Asked Questions
What did the Fed do on 16 September 2026?
The Federal Open Market Committee raised the federal funds target range by 0.25 percentage points to 3.75%–4.00% on a unanimous 12–0 vote. It was the first US rate rise since July 2023. The interest rate on reserve balances moved to 3.90% and the primary credit rate to 4.00%, both effective 17 September 2026.
What is the current US interest rate?
The current US federal funds target range is 3.75%–4.00%, effective 17 September 2026. It replaced the 3.50%–3.75% range that had stood since December 2025.
When is the next Fed interest rate decision?
Wednesday 28 October 2026, at 2:00 PM US Eastern Time, at the close of a two-day meeting running 27–28 October. It does not carry updated projections. The final meeting of 2026 runs 8–9 December and does include a new Summary of Economic Projections and dot plot.
Will the Fed raise rates again in 2026?
The September projections show 16 of 18 participants expecting at least one more quarter-point rise before the end of the year, and four expecting two. The median end-2026 projection of 4.1% is consistent with one further move. Projections are not commitments, and the committee has repeatedly said decisions follow the incoming data.
Does the September dot plot show any rate cuts?
Not within the next two years on the median path. The median projection for the policy rate is 4.1% at both end-2026 and end-2027, implying no net easing across 2027. The median falls to 3.9% for 2028 and 3.6% for 2029, with a longer-run median of 3.2%.
How does a Fed rate rise affect the pound and the euro?
Higher US rates, and expectations that they stay higher for longer, tend to draw capital toward dollar assets and strengthen the dollar. That typically pulls GBP/USD and EUR/USD lower, making dollars more expensive to buy from sterling or euros. Signals of cuts tend to work in the opposite direction.
Do the Fed and the Bank of England decide in the same week?
They did in September 2026: the Fed on Wednesday 16 September and the Bank of England on Thursday 17 September, less than 24 hours apart. The remaining UK decisions in 2026 are 5 November and 17 December, against US decisions on 28 October and 9 December.
Should I transfer dollars before or after a Fed decision?
There is no single answer, because it depends on your deadline and how much rate movement your budget can absorb. What is worth knowing is that expected decisions are usually priced in before the announcement, so the reaction on the day is often smaller than the drift in the weeks beforehand. A forward contract removes the timing question by fixing a rate for a payment up to 12 months ahead; splitting a large sum across several dates averages the rate instead.
Paying dollars into a tightening Fed cycle? Request a live quote and a Cambridge Currencies specialist will work through your timeline, whether fixing or splitting suits the payment, and what the October and December meetings could mean for it. Every transfer is completed by phone with a dedicated specialist who knows your situation.
Cambridge Currencies Ltd arranges international payments through its FCA-authorised partners, Currencycloud (FRN 900199) and ScioPay (FRN 927951). This is general market information, not guidance on a specific transaction; exchange rates move and past movements are not a guide to future rates.
Related guides: USD forecast 2026 · GBP/USD forecast · Next Bank of England rate decision · What is a forward contract? · Weekly currency outlook
Sources: FOMC statement, 16 September 2026; Implementation note, 16 September 2026; FOMC Summary of Economic Projections, 16 September 2026; FOMC meeting calendar; Bank of England, Bank Rate.
