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United States
Limited room for manoeuvre · updated 18 September 2026
What they did
On 16 September the Fed raised its policy rate by 25 basis points to 3.75–4.00%; in the dot plot published the same day the median federal funds rate for both end-2026 and end-2027 sits in the 4.00–4.25% range, and 12 participants pointed to a quarter point above the current level. On the evening of 16 September the House of Representatives passed the Russia and Iran sanctions bill by 262 votes to 159. On 17 September the State Department notified Congress of a 24.3 billion dollar sale to Saudi Arabia covering 48 F-35A aircraft and 49 F135 engines.
Why
In the projections PCE inflation is 3.7% for 2026 and unemployment 4.1%; in the week ending 12 September initial jobless claims fell to 196,000, below the 208,000 expected, and the labour market stayed tight. Even so, the 10-year yield eased on 17 September to 4.94% from the 5.04% reached earlier in the week, its highest level since 2007; the dollar index stood at 100.331 and the VIX at 17.71.
What they must do
It must preserve its credibility on inflation while limiting the pass-through into funding costs of the 10-year yield sticking to the 5% threshold. At the same time it must decide whether it will in practice use its authority to impose tariffs of up to 100% on buyers of Russian energy, and manage both the UN mission's war crimes finding on the 28 February attacks and Canada's rapprochement with the EU.
What comes next
August PCE data on 30 September, FOMC minutes on 7 October, the Trump–Xi summit on 24 September. Congress's 30-day review period on the F-35 sale to Saudi Arabia expires in mid-October; whether the President has signed the sanctions bill has not yet been confirmed. The EU–Canada summit takes place in Montreal on 29–30 October.
Preference
Halting the energy-driven price shock before it turns into persistent inflation, and keeping the tariff authority as a bargaining chip rather than using it.
Observed behaviour
Data-driven monetary policy that offers no guidance; in foreign policy, a transactional stance that deploys arms sales and tariff threats at the same time.
Sources
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