The Federal Open Market Committee set an overnight range of 3.75% to 4% effective September 17, 2026—up from the previous 3.5%‑3.75% band, according to the Fed’s FOMC statement.
The primary credit rate was lifted a quarter point to 4.0%, while the reserve balance rate climbed to 3.90%, signalling a tightening stance that aligns with the recent RBI hike.
In the first session after the announcement, the NSE Sensex rose 0.6% and the Bank Nifty gained 0.5%, with banks and financials outpacing the broader index by 1.2%.
Kotak Mahindra Bank’s research desk noted that the Fed’s move mirrors the RBI’s 1% increase and cautioned that bond yields could rise further if the tightening continues.
Fed officials indicated they plan to keep the target range unchanged until June 2027, giving investors a clear horizon for adjustment.
Market participants are now recalibrating their expectations for corporate earnings, particularly in the banking and consumer discretionary sectors, which could see higher cost of capital.