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The Federal Reserve enters its September meeting with markets increasingly expecting a 25-basis-point interest rate hike, a sharp change from earlier expectations that rates could remain unchanged.TheThe Federal Reserve enters its September meeting with markets increasingly expecting a 25-basis-point interest rate hike, a sharp change from earlier expectations that rates could remain unchanged.The

Fed Rate Hike 2026: Will the Fed Raise Rates by 25 Basis Points at the September FOMC?

#US Stocks

DOT$0.9925-2.61%

Author: James Mitchell

2026/09/15 13:32

Key Takeaways

The Federal Reserve is widely expected to raise interest rates by 25 basis points at its September 15–16 FOMC meeting, lifting the target range to 3.75%–4.00%. Investors will also watch the Fed’s new economic projections and Chair Kevin Warsh’s signals on whether more rate hikes could follow.

The Federal Reserve enters its September meeting with markets increasingly expecting a 25-basis-point interest rate hike, a sharp change from earlier expectations that rates could remain unchanged.

The Federal Open Market Committee will meet on September 15–16, with its policy statement scheduled for 2:00 p.m. ET on September 16, followed by Chair Kevin Warsh’s press conference at 2:30 p.m. ET. Because this is also a quarterly projection meeting, the Fed will release an updated Summary of Economic Projections, giving investors a new view of policymakers’ expectations for inflation, growth, unemployment and interest rates. Federal Reserve September 2026 calendar

The Fed currently holds the federal funds target range at 3.50%–3.75%. A quarter-point increase would take that range to 3.75%–4.00%.

What to Know

The September FOMC meeting takes place on September 15–16.
The Fed’s interest-rate decision is due at 2:00 p.m. ET on September 16.
A 25-basis-point hike would raise the federal funds target range from 3.50%–3.75% to 3.75%–4.00%.
85% of economists in a Reuters poll now expect a quarter-point increase.
Interest-rate futures are pricing roughly a 90% probability of a September hike.
August CPI rose 0.4% month over month and 3.4% year over year.
Investors will be watching the Fed’s new projections and Chair Kevin Warsh’s press conference for clues on whether another hike could follow.

Will the Fed Raise Interest Rates in September?

A 25-basis-point rate hike has become the clear base case heading into the meeting, although no decision is official until the FOMC votes.

A Reuters survey published September 14 found that 86 of 101 economists, or roughly 85%, expect the Fed to raise rates by 25 basis points. Interest-rate futures have moved even further in that direction, pricing around a 90% probability of a hike.

That marks a notable change from earlier in the summer.

At its July meeting, the FOMC voted 9–3 to leave rates unchanged at 3.50%–3.75%. However, Beth Hammack, Neel Kashkari and Lorie Logan dissented because they already preferred a 25-basis-point increase. The Federal Reserve’s July FOMC statement

The July vote therefore showed that support for tighter policy already existed before the latest inflation data arrived.

Why Is the Fed Expected to Raise Rates?

The main issue is inflation.

The U.S. Bureau of Labor Statistics reported that consumer prices rose 0.4% in August, up from a 0.1% increase in July. Headline CPI was 3.4% higher than a year earlier, while gasoline prices rose 3.9% during the month and accounted for more than one-third of the monthly increase.

Core CPI, which excludes food and energy, rose 0.3% during August and 2.4% over the previous 12 months.

Those numbers matter because the Federal Reserve's formal inflation goal remains 2% as measured by the PCE price index.

Chair Kevin Warsh had already emphasized the inflation problem before the latest CPI report. In his August Jackson Hole address, Warsh said the Fed’s preferred 12-month PCE inflation measure stood at 3.7%, while the six-month measure was running at 4.1%. He argued that the Fed needed to be confident inflation was moving clearly and sufficiently quickly toward its target. Kevin Warsh’s Jackson Hole speech

Warsh stopped short of committing to a September decision, saying the Fed should respond to incoming evidence rather than pre-commit to a policy path. But subsequent inflation data have strengthened expectations that the Committee will act.

What Would a 25-Basis-Point Fed Rate Hike Mean?

A 25-basis-point move itself may not be the biggest surprise because markets are already heavily positioned for it.

The more important question is what the hike says about the future path of interest rates.

If the Fed raises rates but signals that September is primarily a response to recent inflation pressure, markets could interpret the move differently than if policymakers indicate that a broader tightening cycle has begun.

That distinction matters for U.S. stocks.

Higher interest rates increase the discount rate used to value future corporate earnings, which can put particular pressure on companies whose valuations depend heavily on profits expected far into the future. That makes high-growth technology and AI stocks especially sensitive to changes in expectations about how long rates may remain elevated.

Financial companies can respond differently because interest rates affect lending margins, credit demand and asset values in different ways. Consumer-facing and highly leveraged companies can also face higher borrowing costs.

For investors, however, the September decision itself may therefore matter less than how many additional increases the Fed believes could eventually be necessary.

Why the Fed’s New Dot Plot Could Matter More Than the Rate Hike

September is more important than a regular FOMC meeting because policymakers will publish a new Summary of Economic Projections.

The projections include policymakers’ estimates for economic growth, inflation and unemployment, as well as the closely watched federal funds rate projections commonly known as the dot plot.

The key question is whether policymakers now expect interest rates to remain higher for longer.

A single 25-basis-point increase would lift the target range to 3.75%–4.00%. But if the new projections imply additional tightening into late 2026 or 2027, that could represent a more meaningful change in the policy outlook.

The opposite is also true. If the Fed hikes but its projections show limited appetite for further tightening, the September move could be interpreted as a more isolated response to inflation rather than the beginning of a long series of increases.

That is why the rate decision, dot plot and Warsh press conference need to be read together.

What Should Stock Investors Watch During the September FOMC?

Three parts of Wednesday’s announcement are likely to matter most.

First is the rate decision itself. A quarter-point hike is now widely expected, so either a larger move or no increase would be a significant surprise.

Second is the Fed’s language around inflation. In July, the Committee said inflation remained elevated relative to its 2% goal and explicitly stated that it would “deliver price stability.” July FOMC statement Any change to that language could affect expectations about what comes next.

Third is Chair Warsh’s discussion of future policy. Warsh has repeatedly resisted providing a predetermined interest-rate path, meaning investors may need to pay close attention to how he describes inflation risk, labor-market conditions and the threshold for another move.

For technology stocks in particular, the important variable is unlikely to be whether rates rise by exactly 25 basis points. Markets will instead be asking whether September marks one adjustment or the beginning of a longer tightening cycle.

Could the Fed Still Hold Rates Steady?

Yes. Until the FOMC vote is completed, a rate hike is an expectation rather than a certainty.

The Fed has repeatedly emphasized that policy decisions depend on incoming economic data and changes in the outlook. Warsh also stressed at Jackson Hole that monetary policy should not be based on a single data point.

However, the probability of a hold has fallen sharply following recent inflation readings. Economists and interest-rate markets now overwhelmingly favor a quarter-point increase, making no change the larger potential surprise heading into Wednesday.

That setup itself could matter for markets: when one outcome becomes heavily priced in, investor attention frequently moves from “Will the Fed hike?” to “What happens after the hike?”

What Happens After the September FOMC?

The next scheduled FOMC meetings are October 27–28 and December 8–9. Federal Reserve FOMC meeting calendar

If the Fed raises rates in September, upcoming inflation, employment and economic-growth data will help determine whether policymakers believe another increase is necessary.

The September projections should provide the first indication of how Committee members currently view that path. But because the Fed has avoided committing to future moves, expectations could continue shifting as new economic data arrive.

For markets, that means the September 16 announcement is likely to answer one question while opening another: is a 25-basis-point rate hike enough, or does the Fed believe inflation requires additional tightening?

FAQ

When is the September FOMC meeting?

The Federal Reserve meets on September 15–16, 2026. The policy statement and interest-rate decision are scheduled for 2:00 p.m. ET on September 16, followed by Chair Kevin Warsh’s press conference at 2:30 p.m. ET. Federal Reserve September calendar

Will the Fed raise interest rates in September 2026?

A rate hike is not official until the FOMC votes, but it is currently the dominant expectation. About 85% of economists surveyed by Reuters expect a 25-basis-point increase, while interest-rate markets are pricing roughly a 90% probability of a hike. Reuters September FOMC poll

What is a 25-basis-point rate hike?

Twenty-five basis points equals 0.25 percentage point. If the Fed raises its current 3.50%–3.75% target range by 25 basis points, the new range would become 3.75%–4.00%.

Why is the Fed considering another rate hike?

Inflation remains above the Fed’s 2% target. August CPI rose 0.4% from July and 3.4% from a year earlier, while Fed Chair Kevin Warsh has said recent inflation readings still do not provide enough evidence that underlying inflation is returning to target quickly enough. August CPI report from the Bureau of Labor Statistics

What time is the Fed rate decision?

The September FOMC decision is scheduled for 2:00 p.m. Eastern Time on September 16, 2026. Chair Kevin Warsh’s press conference begins at 2:30 p.m. ET.

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