With Fed's Credibility at Stake, Fed May Finally Hike Rates After Three Years

Barry Adams
16 Sep, 2026
New York City

U.S. stocks traded around the flatline on Wednesday as investors awaited the Fed's rate decisions later today. 

The S&P 500 Index increased 0.2%, and the tech-focused Nasdaq Composite edged higher by 0.3% ahead of the Fed's rate announcements and outlook for the U.S. economy and inflation. 

Market participants are divided over the Fed's rate decisions, as the central bank's credibility is at stake if policymakers ignore the recent rise in inflation. 

The Federal Reserve could raise the benchmark interest rate by a quarter-point, pushing the target range to 3.75%–4.0%, marking the first rate increase since July 2023. 

Treasury yields have been rising on the expectation of higher prices in the economy, driven by the surging costs of fuel and energy products. 

The yield on 10-year U.S. Treasury notes continued to stay above 5% for the third consecutive session amid rising expectations of a rate hike at the end of a two-day meeting later today. 

The yield on 30-year U.S. Treasury bonds held near 5.37%. 

Moreover, inflation has stayed above the Fed's target rate of 2% for more than 65 months in a row as of August, and despite the Fed's tough talks, policymakers have done little to quell the resurgent inflation. 

West Texas crude oil price decreased 2.2% to $103.42 per barrel, and international Brent crude declined 1.5% to $107.40 as Saudi Arabia struggled to rebuild its pipeline infrastructure for shipments through the Red Sea.  

U.S. diesel prices hit $6 a gallon on Friday for the first time, amid ongoing supply disruptions caused by the U.S. and Israel's attack on Iran since February and the four-year war between Ukraine and Russia.   

 

U.S. Movers 

Intel Corp. increased 3.6% to $100.44, and SK Hynix gained 3.4% to $180.87, as two companies are reportedly in a discussion to fabricate memory chips in the U.S. 

SK Hynix is in early discussion with Intel to fabricate its memory chips at foundries owned by Intel in the U.S., according to a report by Reuters.