Federal Reserve statement explained – September 2026

The Federal Open Market Committee (FOMC) of the Federal Reserve (Fed) voted unanimously today to raise the federal funds rate 0.25% to a range of 3.75% – 4%.

While short, the accompanying statement said that there has been strength in the economy, but the increase is anticipated to help bring inflation in line with the long-term annual goal of 2%

What this means for mortgages

The federal funds going up doesn’t necessarily mean that rates are going to go up right away. More likely, it’s already priced in.

There’s also a timing aspect to this. Because mortgages are sold on the secondary market, mortgage pricing today is typically based on what traders expect the rate to be 60 days from now. This means any movement one way or the other is already priced in. For this reason, waiting on the Fed doesn’t always make sense.

The one time you might see market movements is if the traders are surprised by the direction or magnitude of the Fed’s move. While that hasn’t happened very much in recent memory, it’s always possible in times of increased uncertainty. Because markets move fast, it’s a good idea to stay on top of rates whether you’re buying or doing a refi.

If you’re not ready yet, that’s okay. Try not to focus so much on the rate as on whether the payment fits into your monthly budget and helps you accomplish your homeownership or financial goals. The rate always matters, but there’s nothing stopping you from refinancing in the future if rates drop.¹

If you like what you see and are ready to get started, you can apply online.

Future projections

Knowing that today doesn’t matter as is much as what investors think might happen tomorrow, let’s see what Fed officials think might be coming. We’ll get into it briefly below, but forward guidance isn’t a favorite of the current Fed leadership. Despite this, so far, the Summary of Economic Projections persists.

The median projection for the federal funds for the rest of 2026 and all 2027 at this point is 4.1%. That would mean one more 0.25% increase before the end of the year at minimum to get into that range. Again, it’s not like the market directly is impacted by this day-to-day, but it does give a good directional trend of where rates are going.

Kevin Warsh, in his first year as chairman of the Federal Reserve, has signaled a different philosophy on communication regarding future Fed policy than his predecessor, Jerome Powell.

But once a year, tradition dictates that the Federal Reserve chairman gives a speech at the Jackson Hole policy conference hosted by the Kansas City Fed. So, it’s interesting that he starts the speech with a seemingly lighthearted remark about being prepared for the different kinds of recreational “hikes” that have been taken over the years at the conference.

It could be completely innocuous, but it may have been a reference to the action he expected the committee to take today. Those of us with creative writing backgrounds know that sometimes you’re trying to do a couple of things at once in the same paragraph.

Other than that, he said many of the things a Fed chair has to say. Of course, the Fed has a dual mandate to provide for stable prices and maximum employment. Warsh doesn’t think the two are inherently in conflict.

While that may be true, there is a balancing act that’s constant. And with inflation being well above the 2% target the Fed would like to see, it’s no surprise that that’s the number in the Committee’s crosshairs.

Economic conditions

We’ve alluded to it a little bit up to this point, but it’s worth noting the economic conditions being confronted by the Fed now. Let’s start with inflation and then move on to the labor market.

The overall Personal Consumption Expenditures index, which is the Fed’s preferred inflation metric, came in up 3.7% in the latest reading at the end of August. Although this isn’t the primary data point the Fed looks at, the consumer price index provides another view that inflation has risen 3.4% over the last year.

Meanwhile, the unemployment rate has been very steady at 4.1% or thereabouts for basically the last year.

While there’s no predicting the future, you can keep an eye on mortgage rates by signing up for alerts and determine the right time for you to make a move.

¹Refinancing may increase finance charges over the life of the loan.