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Key developments: In September the Federal Open Market Committee voted unanimously to raise the federal funds rate by a quarter point, moving the target range to 3.75%‑4%. Governor Christopher J. Waller highlighted the decision as a response to stubborn price pressures, rising energy costs and higher inflation expectations, noting that consumer‑confidence data and a jump in one‑year inflation expectations to 3.9% reinforced the need for tighter policy.
Why it matters: The hike ends a nine‑month pause and signals the Fed’s willingness to continue tightening despite a still‑robust labor market. Market pricing reflects a strong likelihood of a hold at the October meeting (81.6% probability) but an 83% chance of another increase in December, indicating that policymakers see more work ahead to bring inflation back to the 2% goal.
What to watch next: Investors should focus on the upcoming CPI release on Oct. 14, which will test whether inflation is accelerating enough to justify the anticipated December hike. Additional guidance from the Fed’s “dot plot” and any shifts in consumer‑inflation expectations will also shape the trajectory of rates through the remainder of 2026. [[1, 2]]