Fed Raised Interest Rates to 3.75%-4.00%: What It Means for Markets

The Fed raised interest rates on Wednesday, 16 September 2026, lifting its target range by 0.25 percentage points to 3.75%-4.00%. The Federal Open Market Committee (FOMC) voted 12-0 for the move, which makes it the first Fed rate increase since July 2023.

The reasoning behind the hike is fairly simple. Inflation is still well above the 2% target, and the US economy looks strong enough to cope with dearer money. Most officials also expect one more hike before the end of 2026, and futures markets agree with them, pricing roughly an 87% chance of at least one further move.

Markets took the news calmly at first. Stocks then slipped during the Fed press conference, while the US dollar and Treasury yields climbed. In this article we walk through the key numbers from the FOMC September 2026 meeting and examine the main factors markets may monitor ahead of the next Fed decision.

What Did the Fed Do With Interest Rates? The Decision at a Glance

What Is the Fed and How Does It Set Rates?

The US Federal Reserve is America's central bank, and its job is to keep prices stable while supporting maximum employment. Eight times a year the FOMC meets to set the Fed benchmark rate, which is the rate banks charge each other for overnight loans.

Every Fed interest rate decision ripples out across the world, because the dollar sits at the heart of global finance. When Fed interest rates rise, borrowing tends to get dearer everywhere from US mortgages to emerging market bonds.

How Much Did the Fed Raise Rates Today?

The answer is 0.25 percentage points, or 25 basis points, so Fed interest rates today sit in a target range of 3.75% to 4.00%. Alongside the main decision, the Fed also moved its technical rates, which act as a corridor that keeps the market rate inside the new range. You can see this decision next to earlier FOMC meetings, and track the dates of upcoming ones, in the Admirals Forex Calendar.

Did the Fed Raise Interest Rates Today With Every Vote in Favour?

Yes, all 12 voting members backed the move. Some analysts had expected Governor Christopher Waller to dissent, yet he voted with the majority in the end. The unanimous vote indicated broad agreement among voting members on the September decision.

Did the Fed Raise Rates Earlier in 2026?

This was the first policy move of 2026 and the first rate change under Chairman Kevin Warsh, who took office in late May. The hike reverses the cut from December 2025, after which rates had stayed at 3.50%-3.75% for nine months.

Why Did the Fed Raise Interest Rates?

US inflation has remained above the 2% target, while the Fed judged that inflation risks warranted a further policy adjustment. Several factors contributed to the decision, so let us look at each of them in turn.

Inflation Is Too High and Still Rising

The Fed's preferred gauge of prices is the PCE price index, and its median forecast for 2026 PCE inflation now stands at 3.7%. Back in March, officials expected just 2.7%, which means the forecast has jumped a full percentage point in only six months.

Why Core CPI Looks Calm While Core PCE Runs Hot

At first glance the numbers seem to clash, since core CPI sits at a five-year low while core PCE keeps climbing. Part of the explanation is housing, which carries a bigger weight in CPI. Housing inflation is cooling, so it drags core CPI lower and has less effect on PCE.

PCE also takes some of its prices from wholesale data, where portfolio management fees are up 18.8% on the year. As a result, core CPI and core PCE can give different signals about underlying inflation pressures, which may affect how markets interpret the Fed's policy stance.

The Oil Shock Is Spreading

The war with Iran began on 28 February 2026, and Brent crude has spent long spells above $100 a barrel ever since. On 17 September it traded near $102, which leaves it up about 61% on the year. That surge has fed straight into fuel costs, with US petrol prices up 27.4% in the year to August.

The Fed is also watching how energy-price pressures feed through to broader inflation. In August, services excluding housing rose 0.6% in a single month, driven largely by airfares and hotel prices. Such second-round effects can influence the inflation outlook.

The Labour Market Is Strong

A healthy jobs market gave the Fed room to act. The latest figures point to steady hiring and low unemployment.

• The US economy added 162,000 jobs in August.
• Unemployment held at 4.1%.
• Weekly jobless claims sit near 206,000.
• The Fed now expects 4.1% unemployment for 2026, down from 4.3% in June.

The Fed has two goals: stable prices and maximum employment. With labour-market conditions remaining relatively firm, policymakers had more room to focus on inflation risks.

Policy Was Still Loose

A headline interest rate tells only part of the story, because what really matters is how far that rate sits above inflation. The table below shows this real rate using the Fed's own figures.

Even after the hike, the real rate remains below the neutral-rate estimate shown above. Warsh said the Fed "removed a dose of accommodation", indicating that policymakers still see monetary conditions as relatively supportive. Rate cycles can affect asset classes differently, and the relationship is not always symmetrical when rates rise versus when they fall. If you want to understand how rate cycles shape different assets, our guide to what to invest in when interest rates fall explains the logic, which simply works in reverse while rates are rising

Federal Reserve September Statement Changes

The statement was short at roughly 130 words, compared with 166 words in July, making changes in wording particularly relevant for interpreting the Fed's message.

The statement gives little guidance on the timing of future moves, consistent with Warsh's preference to avoid forward guidance. Markets therefore have to assess the projections, incoming data and the press conference when forming expectations about the policy path.

Fed Dot Plot September 2026: Federal Reserve Rates in Numbers

Eighteen officials submitted projections this time, as Warsh again chose to skip his own dot. Their numbers show a Fed that expects a stronger economy and stickier inflation than it did in June.

Economic Projections (June Forecast in Brackets)

Source: Federal Reserve Summary of Economic Projections, 16 September 2026.

Where Officials See Rates at the End of 2026

In total, 16 of 18 officials want at least one more hike, and none of them sees a cut this year. The bigger shift came in 2027, where the median jumped to 4.1% from 3.6% in June. In June the Fed expected to start cutting in 2027, whereas now eight officials even see rates at 4.375% by the end of that year.

Risks Tilt Towards Higher Inflation

The risk assessments suggest that many officials see upside risks to inflation relative to the central forecast, which may increase the probability of a tighter policy path if incoming data remains firm. Forecasts remain uncertain, however, and historical forecast errors imply a wide range of possible outcomes for the end-2026 policy rate.

Fed Press Conference: What Kevin Warsh Said

The Kevin Warsh press conference lasted just over half an hour, and the tone stayed firmly focused on inflation throughout. These were his main messages.

• Warsh said inflation has been too high for too long.
• He said the summer data failed to convince him that underlying inflation had improved.
• He said financial conditions were hard to describe as restrictive.
• He repeated that he does not offer forward guidance.
• He framed price stability as good news for Americans with few financial assets.
• He declined to comment on his talks with President Trump.

An RBC strategist described the tone as hawkish without being extreme. Markets subsequently moved as investors reassessed the likely path of rates. The statement and press conference can both influence market expectations, and price moves around these events may be volatile. 

Our step-by-step guide on how to trade the Fed rate decision shows how traders typically approach the statement and the press conference that follows.

Trump Fed Tension After the Hike

President Trump had publicly called for lower US interest rates before the meeting, while the Fed ultimately voted unanimously to raise rates under Chair Kevin Warsh.

In Trump Truth Social posts after the decision, the president said US rates should be 1% or lower, while also saying that he still trusts Warsh. In the week before the meeting, senior White House figures had publicly urged the Fed to hold, with Treasury Secretary Scott Bessent arguing that central banks usually wait during supply shocks. The committee nevertheless voted unanimously to raise rates. Some analysts interpreted the decision as evidence that the Fed was acting independently of public political pressure.

Why Political Developments May Matter for Markets

Political pressure on a central bank can affect expectations for monetary policy and institutional independence, which in turn may influence financial markets. Relevant factors include:

• Changes in demand for perceived safe-haven assets such as gold.
• Changes in longer-term Treasury yields if investors reassess inflation or policy credibility.
• The October meeting ends just six days before the US midterm elections on 3 November.

How Markets Reacted to the Fed Rate Increase

Dow Jones and Other US Indices

All the main indices were trading higher before the decision, and selling accelerated during Warsh's press conference. The DJIA suffered most, partly because Goldman Sachs fell 4% after its chief executive warned about rising costs. By the morning of 17 September US index futures had rebounded. This sequence shows how quickly market pricing can change around central-bank communications. 

On MetaTrader 5 you can follow index CFDs such as the US30 and US500 in real time, with charts that make these intraday swings easy to spot.

A Pattern Around the Press Conference

Stocks have fallen during Warsh's press conference at three meetings in a row. This is a short historical sample and should not be treated as a reliable indicator of how markets will react at the next meeting.

Bonds and the US Dollar

The US 10-year Treasury yield touched its highest level since 2007 this week, while the 2-year yield rose more than 7 basis points on decision day. The dollar also strengthened sharply after the press conference.

On 17 September long-term yields eased again, as many investors took the hike as proof that the Fed is serious about inflation. The shape of the yield curve adds useful context here.

A move in the 10-year Treasury yield around or above 5% may affect equity and gold valuations, although the relationship varies with inflation expectations, growth expectations and other market conditions.

What the Fed Hike Means for Each Market

The hike touched almost every major market, although oil and geopolitics still shape many of these moves. The table gives a quick overview before we look at each asset in more detail.

EUR/USD

EUR/USD fell to about 1.1465, its weakest level since late July, after trading near 1.1537 before the decision. Since early September, when the pair stood near 1.16, it has lost about 1.2%.

Interestingly, the Fed is hiking alongside the European Central Bank, which raised its deposit rate to 2.50% last week in its second hike this year. The policy-rate differential is therefore one factor markets may monitor.

The current rate differential may be supportive of the dollar, all else equal, although it could narrow in 2027 if both central banks follow their expected paths. Bank forecasts also illustrate the uncertainty around the outlook.

Oil prices are one factor that can influence this relationship. Because Europe imports a large share of its energy, sustained increases in crude prices can place additional pressure on the euro through trade and inflation channels, although other factors may offset this effect.

Gold

Spot gold hit a six-week low of $4,235 straight after the decision before recovering to around $4,300. Having traded above $5,500 earlier this year, it was already deep in a correction.

Higher policy rates and bond yields can create headwinds for gold because the metal does not pay interest, although gold prices are also influenced by real yields, the US dollar, inflation expectations and geopolitical demand. Real rates remain relatively low at about +0.5% on the measure used above.

Political and institutional uncertainty can also affect demand for gold as a perceived safe-haven asset. Gold can be particularly volatile around major central-bank decisions, and historical price moves do not indicate how it will perform at future meetings. Because gold can swing by more than $100 on Fed days, it is worth practising on a free demo account before trading it with real money.

Silver

Silver tends to follow gold with bigger swings, and it gave up its morning gains within half an hour of the decision. Its own fundamentals look firm, since the Silver Institute expects a sixth straight market deficit in 2026 of around 46.3 million ounces.

Volatility is extreme this year. Silver peaked near $124 on 29 January 2026 and fell below $60 by the summer. Because it is partly an industrial metal, a sharp economic slowdown would hurt it more than gold.

Oil (Brent and WTI)

The Fed has limited influence on oil right now, as supply news sets the price. Brent fell from almost $108 to about $102 in a day after Saudi Arabia said it would restore half of its East-West pipeline capacity within days. That pipeline bypasses the Strait of Hormuz, and drones damaged it on 11 September.

Volatility has been high this year. Silver peaked near $124 on 29 January 2026 and fell below $60 by the summer. Because it is also an industrial metal, its price can be sensitive to changes in economic-growth expectations as well as precious-metals demand.

USD/JPY

The Fed has limited direct influence on oil prices when supply developments dominate. Brent fell from almost $108 to about $102 in a day after Saudi Arabia said it would restore half of its East-West pipeline capacity within days. That pipeline bypasses the Strait of Hormuz, and drones damaged it on 11 September.

A lasting peace deal could materially affect the oil market. In April, a two-week ceasefire coincided with Brent falling almost 16% to $92.30. Lower oil prices could reduce some inflation pressures and may affect the dollar through changes in rate expectations, although the overall market impact would depend on broader economic conditions.

Stock Indices

After both expected policy moves, the US-Japan rate gap would remain broadly similar, so Governor Ueda's communication may be an important driver of the pair. The yen also moved more than 2% in a single day in early September, which prompted discussion of possible intervention by Tokyo.

Higher long-term yields can put pressure on equity valuations by increasing discount rates, with growth stocks often more sensitive to such changes. The Nasdaq nevertheless held up relatively well on the day, while investors also assessed the Fed's comments on productivity and investment.

Bitcoin

Bitcoin trades near $76,000, down from about $78,500 at the start of September. Beneath the calm price, perpetual futures saw about $82 million of net selling in one hour after the decision, while spot buyers absorbed about $15.5 million. Crypto shares fell harder than bitcoin itself, as a failed Senate vote on the CLARITY Act added to the pressure.

GBP/USD

The Bank of England held Bank Rate at 3.75% on 17 September by a 6-3 vote, with three members wanting a hike. UK inflation rose to 3.1% in August, and the next Bank of England interest rate decision comes on 5 November.

A Fed hike combined with a Bank of England hold widens the near-term policy-rate differential in favour of the dollar, which may place downward pressure on sterling, all else equal.

Mortgage Rates Today and Other Interest Rates Today

Mortgage rates follow long-term Treasury yields more closely than the Fed rate itself, and both have moved higher this month. Here is how the main measures looked around the decision.

The figures differ because daily lender data and weekly surveys measure slightly different things. Either way, the cost adds up quickly. A $350,000 loan over 30 years at 7.01% costs about $2,331 a month, so even a quarter-point difference is worth thousands over the life of the loan.

What the Hike Means for US Savers and Borrowers

The effects on household finances will arrive at different speeds.

• Variable credit card rates usually rise within one or two billing cycles.
• High-yield savings accounts tend to pay a little more.
• Existing fixed-rate loans keep their current rate.
• New car loans and personal loans may become more expensive.

Global View: Central Banks and Interest Rates Beyond the US

Because the Fed is tightening alongside other central banks, the dollar enjoys a smaller rate advantage than it did in 2022. For currency markets, an important factor is how the pace of policy changes compares with market expectations.

Asian Markets and Gift Nifty

Gift Nifty trades on NSE International Exchange in GIFT City, and Indian traders use it for early signals before the NSE opens. A stronger dollar often weighs on emerging market shares, and higher US yields can pull foreign money out of Indian equities.

Gift Nifty and US index futures are often monitored together after major US policy decisions because overnight moves can be correlated, although the relationship is not stable and can change with market conditions.

Will the Fed Raise Interest Rates Again?

Current futures pricing and the Fed's own projections both indicate that further tightening remains possible, although the timing and number of any additional moves are uncertain.

Because current market pricing already reflects a meaningful probability of further tightening, outcomes that differ materially from those expectations could generate larger market moves.

October or December?

Futures put the odds of an October hike at about 51% on 17 September, up from 40% just after the decision. Goldman Sachs Asset Management expects the Fed to skip October, because the meeting ends six days before the midterms, and its base case is a hike in December.

On the other hand, the hawks have been gaining ground for months. As far back as July, three officials already favoured an immediate hike. The data released between now and 28 October will settle the debate, so keep the release dates in the Forex Calendar close at hand.

Could the Fed Raise Rates Twice More?

Four officials pencil in two more hikes this year, while futures pricing on 17 September assigned a probability above 35% to that outcome. Stronger-than-expected inflation data or renewed oil-supply disruption could lead markets to reassess the probability of additional tightening.

Warsh's Balance Sheet Review

The Fed's balance sheet stands at about $6.7 trillion, and one of Warsh's five task forces is currently reviewing it. Most task forces aim to finish by the end of the year, so findings could land around the December meeting.

Faster balance-sheet reduction could tighten financial conditions alongside rate increases and may affect longer-dated bonds, although the scale of the impact would depend on the design and timing of any changes.

Scenario Analysis for the Rest of 2026

The scenarios below are illustrative rather than forecasts. They show possible market sensitivities under different combinations of policy and oil-price developments; actual outcomes may differ materially because many factors influence each asset.

The table illustrates possible directional sensitivities only and does not predict exact prices or future performance. Several assets can respond to the same macroeconomic driver, so correlations may increase around major policy or geopolitical events. Those relationships can also change quickly.

To track these assets side by side on one screen, our walkthrough on opening a MetaTrader 5 account will get you set up quickly.

What Markets May Monitor Before the Next Fed Decision

Ahead of the next meeting, several scheduled data releases and market indicators may influence expectations for the policy path. These factors are relevant to market analysis but do not determine how any particular asset will perform.

Key Economic Dates

Inflation, labour-market and activity data released before the 27-28 October meeting may affect expectations for the next Fed decision. The PCE release on 30 September will be one of the first major inflation updates following the September projections.

Market Pricing

Fed funds futures can provide an indication of how markets are pricing possible policy outcomes. These probabilities can change quickly as new information becomes available and should not be treated as forecasts or guarantees.

• Volatility Around Major Releases
• The policy statement and the Chair's press conference are separate information events, and markets may react to each of them differently.
• Spreads and liquidity can change sharply around major economic announcements, particularly in leveraged products such as CFDs.
• Volatility can increase rapidly before and after major releases, and market prices can move sharply in either direction.

The statement and press conference can each influence market expectations, while the sequence and magnitude of market reactions are not predictable.

Oil and Geopolitical Developments

Oil prices remain an important input into the inflation outlook. Developments affecting supply, including events in the Middle East, may therefore influence inflation expectations and market expectations for monetary policy.

Cross-Asset Correlations

Different assets can respond to the same macroeconomic factor at the same time. Changes in oil prices, real yields or expectations for Fed policy may influence currencies, precious metals, bonds and equities simultaneously.

Risk Considerations During Fed Weeks

Correlations are not stable and can change during periods of market stress. Leveraged products can magnify both gains and losses, while fast-moving markets may involve wider spreads, reduced liquidity and slippage.

Using a Demo Environment

A demo environment can be used to observe platform functionality and market behaviour without using real funds. Results in a demo environment do not replicate all conditions of live trading.

Historical reactions to smaller economic releases can provide context on volatility, but they do not predict how markets will behave at a future Fed meeting.

General Risk Factors Around Major Central-Bank Events

Major central-bank announcements can be associated with rapid price movements, wider spreads, reduced liquidity and changes in margin requirements. Leveraged products can magnify both gains and losses. When you feel ready for live markets, you can open a trading account with Admirals. Start small and scale up only once your results are consistent.

For Long-Term Investors

For longer-term investors, higher-for-longer interest rates may affect equity valuations, bond prices, financing costs and portfolio correlations. The significance of these effects depends on an investor's objectives, time horizon, holdings and risk tolerance.

• Portfolio sensitivity to interest-rate changes can vary by asset class and investment horizon.
• Liquidity needs can become more important during periods of market volatility.
• Rebalancing approaches vary and should reflect individual objectives and constraints.
• Bond prices can be sensitive to changes in yields, particularly for longer-duration holdings.

For Borrowers and Savers

Higher policy and market interest rates can affect borrowing and saving products differently.

• Fixed and variable borrowing rates may respond differently to changes in market interest rates.
• Variable-rate borrowing costs may adjust relatively quickly, depending on product terms.
• Deposit rates may also change, depending on how individual financial institutions pass through policy-rate changes.

Frequently Asked Questions

How much did the Fed raise rates?

The Fed raised rates by 0.25 percentage points, lifting the target range to 3.75%-4.00% on 16 September 2026.

Did the Fed raise interest rates in September 2026?

Yes. The FOMC voted 12-0 for a quarter-point hike, the first increase since July 2023.

Why is the Fed raising rates in a strong economy?

Inflation remains well above the 2% target. A solid jobs market lets the Fed tighten with less risk.

Will the Fed raise rates again in 2026?

Sixteen of 18 officials expect at least one more hike. Futures markets price roughly an 87% chance.

When is the next Fed meeting?

The next FOMC meeting runs on 27-28 October 2026. Another follows on 8-9 December with fresh projections.

How did the Dow Jones react to the Fed decision?

The Dow Jones fell 631 points, or 1.21%, to 51,461.90 as selling picked up during Warsh's press conference.

What does the Fed rate hike mean for gold?

Higher yields and a stronger dollar can create headwinds for gold, while geopolitical risk, real yields and safe-haven demand may offset some of that pressure.

Are mortgage rates today higher after the Fed hike?

Yes. Zillow data shows the average 30-year fixed purchase rate at 7.37% on 17 September 2026.

What does the Fed decision mean for EUR/USD?

EUR/USD fell to around 1.1465, its lowest since late July, as the dollar gained on hawkish signals.

What should markets watch before the next Fed decision?

Key factors include incoming inflation and labour-market data, Fed communications, futures pricing, oil prices and broader financial conditions. None of these factors can reliably predict the market reaction to the next decision.

Disclaimer

This article is provided for general information and educational purposes only. It does not constitute investment advice or a personal recommendation, and it is not an offer or solicitation to buy or sell any financial instrument. Admirals has not taken your investment objectives, financial situation, knowledge, experience or individual circumstances into account.

All analysis reflects publicly available data as at 17 September 2026, and figures and forecasts may change without notice. Third-party data comes from sources believed to be reliable, although Admirals has not independently verified it and does not guarantee its accuracy or completeness. Past performance is not a reliable indicator of future results, and forecasts are not a reliable indicator of future performance.

Any investment or trading decision is your own responsibility. Nothing in this article should be relied upon as the sole basis for such a decision. Any limitation or exclusion of liability applies only to the extent permitted by applicable law.

Contracts for Difference (CFDs) are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Past performance is not a reliable indicator of future results.

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Sources

• Federal Reserve FOMC statement and projections for 16 September 2026
• CNBC report on the September 2026 Fed decision
• CNN Business coverage of the first rate hike since 2023
• Bloomberg report on Warsh and the hike
• CBS News mortgage rates for 17 September 2026
• Freddie Mac Primary Mortgage Market Survey