The Federal Reserve raises interest rates by 25 basis points to 3.75%-4.00% in September, in line with expectations.

On September 16 local time, the Federal Reserve held the September 2026 FOMC meeting and raised the target range for the federal funds rate to 3.75%-4.00%. In response, Liu Sijia, an analyst at Donghai Securities, stated that the Fed's 25bp rate hike was in line with market expectations, as the probability of a rate hike had already been priced in at over 90% before the meeting. Besides fulfilling the hawkish stance since the Jackson Hole meeting, it also helps to restore the Fed's image of independence and reduces the risk of an increase in the term premium of long-term US Treasury yields. Currently, CME data shows a probability of about 50% for a rate hike in October, and the probability of another rate hike within the year is close to 90%, which is consistent with the expectations shown in the dot plot. However, unless concerns about inflation driven by rising oil prices due to supply factors materialize, the current K-shaped divergence in the US economy and the weak balance of declining labor supply and demand do not support the Fed starting a cycle of consecutive rate hikes. Waller also stated that current financial conditions are not restrictive, and this rate hike is the removal of part of the previous easing. Whether a cyclical series of rate hikes will be initiated remains uncertain.