The Federal Reserve increased the benchmark federal funds rate by 25 basis points on September 16. This decision brought the target range to 3.75%-4.0%. The FOMC voted 12-0 in favor of the hike, marking the first such increase since July 2023.
Following the announcement, the Dow Jones Industrial Average fell by 631 points, or 1.2%. The S&P 500 declined by 0.45%, while the Nasdaq remained flat. Treasury yields for the 2-year note rose by more than 6-7 basis points.
Chairman Kevin Warsh stated that inflation remains above the 2% target, citing rising energy prices as a primary factor. The committee emphasized its commitment to returning price growth to the established goal.
Projections from the meeting indicate that 16 out of 18 FOMC participants expect at least one additional quarter-point rate hike before the end of the year. Market participants are now focused on the potential impact of these borrowing costs on the economy.
