US Federal Reserve rate decision, 16 Sept 2026

Cut 25bp to 3.25% to 3.50%

The Fed held at 3.50% to 3.75% in July on a divided 9-3 vote. Since then the data has turned: July payrolls fell -23,000 with May and June revised sharply lower, marking two straight months of soft labor data, while unemployment held at 4.1%. July CPI cooled to 3.4% y/y from 3.5% in June, the second consecutive month of deceleration, with core at 2.5%. Market pricing already reflects this shift: roughly 85% probability of a 25bp cut priced in ahead of the meeting. Two more data points land before the decision -- the August jobs report (4 Sept) and August CPI (11 Sept) -- and could still move the calculus, but the weight of evidence points to a cut rather than a hold.