FOMC Press Conference September 16, 2026

Good day. In the meeting just concluded, the FOMC decided to raise the target range for the federal funds rate by a ¼ percentage point to 3 to 4 percent, in support of the Federal Reserve's dual mandate. The Committee is continuing its policy of maintaining ample reserves in the banking system. As noted in the policy statement, released just a short while ago, economic activity is expanding at a solid pace. While uncertainty remains elevated-owing, in part, to geopolitical developments-domestic spending has been resilient. Productivity growth-strong; and capital investment is robust. Job gains have kept pace with the workforce, and the unemployment rate has changed little. But inflation remains elevated. Today's policy action will support a timelier return to the Committee's 2 percent goal. This Committee will deliver price stability. Now I'll get into some further detail.

Our decision comes at a time when the American economy appears to be strengthening. New hiring, private-sector earnings, business capital investment-each of these markers has improved in recent months and is pointing in a good direction. Credit flows have been robust, particularly for businesses. And, as I said at the policy symposium in Jackson Hole, I would be hard pressed to describe broad financial conditions as restrictive. This view was widely shared by the Committee. So we removed a dose of accommodation. Consider the geopolitical landscape of shocks and uncertainty, and you begin to appreciate the resilience of the U.S. economy. Given that resilience, and the potential for even greater performance, an attitude of optimism is exactly what I heard inside the FOMC these last two days. One basic sign of strength is the state of America's labor markets.

The jobless-the jobless rate remains low at around 4.1 percent, and both job openings and weekly hours have been increasing. Unemployment claims, on a four-week moving average, are running at levels consistent with full employment. So the labor side of the Fed's congressional remit is in good shape. Yet, for more than five years, inflation has been running above target. So our predominant focus is on the price-stability side of our mandate. The plain fact is that inflation is too high and has been for too long. This summer's inflation readings do not tell me that underlying trends have meaningfully improved. Based on the most recent CPI and PPI data, the 12-month change in total PCE prices likely was around 3.6 percent in August. Core PCE and CPI prices are running at about 3.2 and 2.4 percent, respectively.

Too many categories are still posting increases above 3 percent on both a 6- and 12-month basis. I noted in Jackson Hole that overall commodity prices also bear watching. And, over the intermeeting period, the prices of many of these key inputs have risen. Since my first FOMC meeting as Chairman in June, my colleagues and I have been unequivocal in our commitment to price stability and to our 2 percent PCE inflation objective. At our July meeting, we all agreed that inflation remained too high, and we expressed our joint readiness to act as circumstances might require. And a good majority of my colleagues and I thought the wiser course then would be to await new information in the intermeeting period. Last month in Wyoming, I expressed my commitment to a monetary policy discipline, not to a decision. I defined the standard for action.

We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Today the FOMC decided that this standard has not been satisfied. The Committee's unanimous vote shows our resolve to achieve price stability on a timelier basis. We aim to ensure that credit and financial conditions are consistent over time with our mandate, that relative price changes in some sectors of the economy do not broaden, that inflation compensation in market prices stays low, and that inflation expectations remain well anchored. This afternoon, you also received the Summary of Economic Projections. It reflects the views of my colleagues on the Committee, but, as in June, I have not offered a projection of my own. But, like in June, I said I would faithfully discharge the summary of their projections, so here goes.

In the summary's median projections, real GDP rises at 2.3 percent this year, 2.4 percent next year. Total PCE inflation runs at 3.7 percent this year and falls to 2.3 percent next year. The unemployment rate holds steady at about 4.1 percent. The median participant judges that the appropriate federal funds rate to be 4.1 percent at the end of this year and to remain there next year. Inflation risks are to the upside while labor risks are roughly balanced. In my meetings these last few weeks-in Jackson Hole; in Asheville at the G-20 meeting, which the U.S. hosted; and at a central bank conference in Basel-it was evident that most advanced economies are facing price pressures. Their central banks are making their own judgments, consistent with their own remits. Our decision today reflects our best judgment in service to our remit.

The Fed has a role in sustaining the economic progress happening in America right now and the rising opportunities that come with it. Those who are least well off have the most to gain from a durable expansion, a solid labor market, and stable prices. We at the Fed are unwavering in our vital and straightforward purpose: full employment and price stability, and a thriving American economy that sets the standard for the world. And, with that, I'll take a few of your questions.

It's a-it's a-it's a good question, Richard. We cannot affect any individual price, whether it be oil prices, whether it be foodstuffs at the grocery store. But what we can do, and will do, is ensure that any change in relative prices don't broaden out, don't have second- and third-order effects in the economy. That's what we're tasked to do, and that's what we will do.

So we're trying to get to more people, so now I get to cherry-pick my preferred question from you, Colby. This won't surprise you: I'm not in the forward guidance business. The decision we made today was a sober decision, serious decision, responsible decision, one that we have been preparing for and thinking about in my 110 or 20 days here. You heard from other people in the dots effectively, what their forecasts are. I'm not going to prejudge any future decisions we make. You might have heard me say in Jackson Hole, I committed to a discipline, a set of principles. I committed to look outside the window and see what I can observe. That's what I did in Jackson. That's what we did today.

So I've said this before-I'll repeat it: The Fed has an enormous amount of power. These are decisions we make. But getting the understanding right between financial markets and the Fed is a balance that I've long thought could be better struck. We made this decision today based on our assessment of the situation, based on our assessment of the trajectory for employment, based on our judgment on the strength of the economy. Sometimes the market tries to prejudge our outcomes. I'll observe market prices and, and see what they have to say. But today was our decision.

I've got nothing for you on the-on the discussion with the President. So-but I won't make that count as your question. On the American people, as I said in my prepared remarks, the least well off are the ones who have the most to gain from stable prices. The decision we made today was the right decision to deliver on the remit that Congress gave us to ensure stable prices. Moreover, I would say, because of the underlying strength of the economy, because we are, as I mentioned, largely acting consistent with full employment, we can be focused on stable prices. Some months ago, I said we will deliver stable prices. Today's action is consistent with that.

Yeah. So, as you might know, I'm not a data-point-dependent guy. So I won't-I won't react one way or another to data that, that shows up on our doorstep. But, on your first question-I think the more important one-what transpired in the seven weeks since we last met? First, I would say a good majority of my colleagues seven weeks ago thought seven weeks is a good investment. It's a way to buy time so we could make a wise decision. I'll highlight three things that have happened in that intermeeting period. One is, I made out a judgment seven weeks ago about the strength of the economy. There's been a pretty wide-ranging set of data, including in the labor markets, that the economy has strengthened. You might have heard me say that in Jackson Hole a few weeks ago. It's a judgment that I have, and the Committee has. Second, inflation trends-I said in Jackson Hole, trends matter.

I said in Jackson Hole, we need to look outside the window and interrogate reality. My judgment some weeks ago was, the inflation summer trends weren't passing the test. I've seen very little information since that would make me reverse that decision, so I've stuck with it. And the third thing that's changed in seven weeks is geopolitics. And there's no hiding from hot spots around the world, and our judgment about what is the most likely, or least likely, of the geopolitical situation has changed. All three of those things led-lend themselves to a firm, unanimous decision today.

I've described previously I found it difficult to describe financial conditions as restrictive. I think I said I was hard pressed. What I heard around the table in the last couple of days is, my colleagues were hard pressed to describe it that way, too. We removed a dose of accommodation so that financial and credit conditions would be more consistent with our ultimate objectives. That was the decision. That was our judgment, and we'll continue to evaluate that prospectively.

In a word, no. In a few words, I'd say this. I've always been interested in a neutral rate as an academic matter. Back when I learned economics, we used to think of it as a Wicksellian rate. It's a real equilibrium rate. It's useful academically. It's, it's a discussion to help us think about policy. Do I think it has any operational effect on decisions that we make today? No, I don't.

So market participants and reporters, I think generally over the course of the last decade or so, have grown accustomed to waiting somewhat breathlessly on a data point. That isn't my view. I was not waiting breathlessly on what any particular data was, whether it was retail sales this morning or a CPI "print" last week. I'll just reiterate: Trends matter. Data points are noisy. Data point dependence is a dangerous preoccupation. It's not something that concerns me. Markets over time will come to understand how this Fed makes its decisions, what's relevant and not, and I wouldn't want to editorialize that for them beyond it.

You gave me a long menu from which to choose. They're all very tempting. I don't have anything for you on, on discussions with the President. And I'm not a Wall Street newsletter. Part of the independence of the Federal Reserve is we stay in our lane. Independence is a two-way street. We'll let people that do trade policy and fiscal policy stay in their lane, too. That's how we can stand up here and call them the way we see them.

Yeah. It's a fair question. In the macroeconomics, we tend to look at aggregates around here, aggregate GDP, overall labor market trends, the state of inflation. A lot of people in Washington spend a lot of time on distributional consequences, and that's their job and their business. What I was referring to in the least well off tend to be people that don't own financial assets-call that a bit less than 50 percent of the country. They don't have equity in their home. They don't have equity in a 401k plan. So they're living off their paycheck that comes every couple of weeks. The thing that we can do consistent with our mandate is two things. Ask ourselves, is the country running more or less at full employment? And we've done that. That doesn't mean that individuals aren't searching for a job, but in aggregate, we're running more or less at full employment.

If so, we can then look at the other side of the-our mandate, and let that be our focus. And stable prices, an environment where inflation is running consistent with our 2 percent objective, offers good news. Because that way, when they get their wages, they can put their head above water and deliver real take-home pay increases. We don't have total responsibility for it. But we do have responsibility for stable prices-as I've said before, inflation is a, is a choice-and today we took a step in delivering it.

Well, I don't ask them to prejudge decisions that we're going to make, so I won't prejudge decisions that they make. But I will say this, I've spent some time with foreign central bank counterparts, not just in the last 20 years, but over the course of the last several weeks, as I mentioned, in Jackson Hole, at the G-20 meeting we hosted in North Carolina, and at a central bank meeting in Basel. What I heard around the table from most of the advanced economies is they're suffering from price pressures, too. And they're making their own choices consistent with their remit. It tells me a couple things. One is, when the Federal Reserve makes a policy choice, it matters not just to the U.S. economy, but it spills over to the rest of the world. To a lesser extent, that's true for them, too.

When foreign central banks make decisions, where they're confronted with higher prices, and they choose, consistent with their remit, to raise rates, then they're helping to quash inflation in their countries. And there's spillovers and spillbacks in both directions. Beyond that, I won't opine on what other central banks may choose to do this week or beyond.

So I don't-I don't remember the full context, but I can tell you, Nick, about the state of growth now. My suspicion, 110 or 20 days ago when I showed up, was that the U.S. economy was strengthening. Even over the last several weeks I think we now have data broadly defined that says the economy has indeed strengthened. Underlying growth is higher. Inflation is the problem. Stable prices have been the problem for now more than five and a half years. So what the Committee decided to do today was take an action to ensure a timelier return to our price-stability objective. Price stability is foundational to economic growth, and I think we took an important step today to deliver it. And we did it in part by removing the dose of accommodation that I-that I mentioned before.

Yeah. Let me speak to the history. What bond market prices do prospectively, I want to let them do-I want to let them tell me any story they wish to. I want to try to interrogate that. But why did yields rise, let's say, since the last FOMC meeting until this? I'll give you three, three reasons, but I would say these things tend to be overdetermined. This is a complicated set of things that are affecting the most important asset anywhere in the world, the 10-year Treasury. It's the risk-free asset upon which every price of virtually every asset in the world is related to. So I'll say three things. First is economic strength. Part of the reason why we've seen, over the course of 2026, long-term yields go up is, the economy has strengthened. Second reason, competition for capital.

The surge in capital expenditures, which I referenced in my remarks, is real, and the so-called hyperscalers are out in the market raising funding. And so the competition for capital is real, and I think it partly explains the increase in yields. The third is geopolitics. The situation hot spots around the world are driving long-term yields. It's not simply spot prices of energy or spot prices for corn or soybeans or wheat, but it's the difference between those spot prices and so-called crack spreads-what that means for products that find their way into stores across the country. I think those are the three leading explanations but certainly not an exclusive list.

One easy way to square that, Mike, is those aren't my forecasts. Those are the forecasts of my 18 colleagues, and I've tried to represent them dutifully to you. My business is to not give forward guidance. But my commitment in June was to reaffirm to the American people, to anyone listening, that we will deliver price stability. My commitment in July was to say, we want to buy a little bit of time. We want to evaluate what's happening across a range of dimensions, and what I said in Jackson Hole in August is, we're committed to a discipline, not to a decision. Today's action starts to show we're serious about this. And we will deliver on the price-stability objective, and as the statement said, we'll do it on a-on a timelier basis. That's our decision. And when we continue our discussions over the course of the next several weeks and months, we'll have more to say about it.

But I'm ill-prepared to prejudge those future actions.

So I've spent a lot of time thinking about AI, and before I found my way to this post, I spent a lot of time talking about it publicly. Independence of the Federal Reserve is about staying in our lane. We care very much about what's happening in artificial intelligence. We care much about the implications on the demand side of the economy and ultimately on the supply side of the economy. I care so much-I think it's so important-that we established a task force that should report by the end of the year to help us think about the implications for our future policy conjuncture. But the policy decisions that are made about the risks and rewards, the challenges and opportunities, those are decisions made by other parts of the government. I'm going to leave it to them to make those political decisions, those policy decisions.

The implications of those decisions obviously have some bearing on our day job, and that's where we'll be focused.

So, there's, there's, there's a lot there, Jennifer. Let me see if I can't do just a little bit of it. First, we believe that the unemployment rate is basically running consistent with full employment. I don't believe that we need to do harm to the labor markets to achieve our objective. I don't believe that the two parts of our mandate, price stability and full employment, are working at cross purposes over the medium term. So economic growth-that is ensuring continuous, sustainable, durable, economic growth-that's the business we're in. And the job we did today, the job we'll continue to do, is to ensure price stability, which can mean that sustainable, durable, economic growth can go on for longer. The economy can be stronger, and as I mentioned before, the least well off can get the benefits of it.

Thank you.