US bank stocks fell after the Federal Reserve said it would keep the federal funds rate within the range of 5.25% to 5.5%.

Following the Fed's announcement, the KBW Nasdaq Bank Index closed down 0.84% on Sept. 20 while the S&P 500 closed down 0.94%.

The Federal Open Market Committee has raised benchmark interest rates by 525 basis points since March 2022. Most recently, it left rates flat in June before raising them in July by 25 basis points.

"Looking ahead we are in a position to proceed carefully in determining the extent of additional policy firming that may be appropriate," Fed Chair Jerome Powell told reporters. "Our decisions will be based on our ongoing assessments of the incoming data and the evolving outlook and risks."

The Fed's Summary of Economic Projections, released Sept. 20 alongside the rate decision, revealed Fed officials' average projected federal funds rate of 5.6% for this year, the same as the June estimate.

The projections also included the Federal Open Market Committee's median expectation of a 3.3% rise in personal consumption expenditure inflation in 2023, up from the June projection of 3.2%. The central bank expects the personal consumption expenditures index, its preferred inflation gauge, to be 2.5% in 2024, the same level it predicted in June and in March.

In addition, the Fed forecast unemployment to average 3.8% in 2023, down from its June projection of 4.1%.

According to the projections, 12 of 19 participants predict the fed funds rate will be in a target range higher by 25 basis points this year.

"A majority of participants believe that it is more likely than not that ... it will be appropriate for us to raise rates one more time in the two remaining meetings this year," Powell said, referencing those projections. "Others believe that we have already reached that."

"What we've decided to do is maintain the policy rate and await further data," Powell added. "We want to see convincing evidence, really, that we have reached the appropriate level. And we've seen progress, and we welcome that, but we need to see more progress before we'll be willing to reach that conclusion."

Among individual bank stocks, the biggest movers included First Citizens BancShares Inc., which closed up 1.81% on Sept. 20; New York Community Bancorp Inc., down 2.33%; and KeyCorp, down 1.69%.