The Federal Reserve raised its benchmark rate to a 3.75‑4% range with a 25‑basis‑point increase, snapping a 23‑month pause and sending the S&P 500 higher by 0.8% on the day—
The move came after a unanimous 12‑to‑0 vote by the 12 FOMC members, a rare display of consensus that reinforced the 92.7% probability of a hike already priced in by CME’s FedWatch Tool—
Federal officials reiterated that inflation remains stubbornly above the 2% target, and the policy statement flagged a 3.7% headline inflation forecast for 2026, up from 3.4% in June—
The dot plot now shows most policymakers expecting at least one additional hike in the coming months, with a handful projecting two more, but no cuts until 2028—
Market reaction was swift: the NASDAQ rallied 1.1%, while Treasury yields edged up 5 basis points on the day, reflecting traders’ belief that the Fed will keep tightening until inflation stabilises. Analysts now warn that higher US borrowing costs could compress global growth and push emerging‑market currencies lower—
Looking ahead, the Fed is expected to release its next policy statement on October 25, with guidance likely to focus on inflation data and the pace of any further rate increases.