With Fed's Credibility at Stake, FOMC Finally Hiked 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. 

Bond yields remained in focus after the Federal Reserve raised interest rates for the first time since July 2023 amid persistent inflation.  

The Federal Reserve unanimously voted to raise its benchmark interest rate by 25 basis points, shifting monetary policy in response to persistent inflationary pressures and a tightening labor market. 

The rate-setting committee raised the Fed funds rate range to between 3.75% and 4.0%, as the Fed struggled to lower inflation to its target rate of 2%.  

16 of 18 members of the committee indicated plans for at least one additional hike later this year, though they project holding rates steady throughout the following year despite inflation remaining above their long-term target.

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.