Fed expected to raise rates 25 bps at September meeting, first hike since 2023

The U.S. Federal Reserve is expected to announce a 25-basis-point interest rate hike at its September 15–16, 2026 meeting, marking the first increase since July 2023. This anticipated move comes after the Fed maintained a steady rate of 3.50%–3.75% throughout 2026. Market participants have been closely monitoring indications of inflationary pressure, which may have prompted the Fed to reconsider its previous holding pattern. The potential rate hike would adjust the target range to 3.75%–4.00%, reflecting a shift toward tighter monetary policy.

Key Takeaways

• Pricing suggests a high likelihood of a rate hike, with sub-market pricing at 88.5% YES for the September meeting.
• The anticipated increase would be the first since July 2023, consistent with a response to inflation concerns.
• Observers note consistent expectations for a rate hike, as shown by increased odds over the past week.

What to Watch

The focus will be on the Federal Open Market Committee’s (FOMC) announcement and subsequent press conference by Chair Jerome Powell. Key indicators to watch include any language suggesting further tightening or shifts in economic projections. Analysts will also be attentive to the FOMC’s assessment of inflation and labor market conditions, which could influence future decisions. Further developments could either reinforce a YES scenario if inflation persists or shift expectations if economic indicators weaken.

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