Fed Raises Key Interest Rate for First Time Since 2023

On Wednesday, September 16, The Federal Reserve raised its benchmark interest rate a quarter of a percent (i.e, 25 basis points). This marks a sharp policy change as the Fed uses its monetary policy tools to try to tame stubborn inflation. The move will affect the cost of borrowing for cars, homes, big ticket items, and business loans. Most Small Business Administration's 7a guaranteed loan programs interest rates are pegged to the Prime Rate, which in turn, is pegged to the Fed's benchmark interest rate. Business loans already in closing but not yet funded could feel the pinch. The current annual inflation rate in the U.S. as of August 2026, was 3.4% according to the U.S. Bureau of Labor Statistics. The main drivers of this inflation rate are rising energy cost and gasoline prices. The Fed's long-term target inflation rate is 2%. In the Fed's South Region (which includes Virginia, North Carolina, and South Carolina), the current annual inflation rate is 3.1%, below the national average.