The Federal Reserve raised the federal funds rate by 25 basis points on September 16, lifting its target range to 3.75%-4.00% in its first rate increase in over three years. Richmond Fed President Thomas Barkin said the decision reflected a judgment that inflation risks outweighed employment risks. Headline PCE inflation is 3.7% and core PCE inflation is 3.4%, both above the Fed's 2% target, while the unemployment rate projection was lowered to 4.1%. The Summary of Economic Projections upgraded growth forecasts, and the median dot plot indicated that the federal funds rate could reach 4.1% by the end of 2026. Sixteen of 18 FOMC participants expect at least one additional 25-basis-point increase before the end of 2026. Geopolitical tensions and supply-chain disruptions are adding to inflation pressure. Markets have responded with the 10-year Treasury yield above 5% and mortgage rates nearing 7%, increasing borrowing costs and making government bonds more competitive with riskier assets.