Fed meeting live updates: Anticipation builds with Fed expected to hike interest rates for first time in 3 years

Fed meeting live updates: Anticipation builds with Fed expected to hike interest rates for first time in 3 years Grace O'Donnell · Editor, Special Projects Updated Wed, September 16, 2026 at 10:17 PM GMT+9 1 min read CME -0.29% The Federal Reserve's September policy meeting kicked off Tuesday morning, and markets overwhelmingly expect the Fed to raise interest rates by 25 basis points on Wednesday amid persistently high inflation.

Such a move would mark the Fed's first increase in the fed funds rate since 2023, when the Jerome Powell-led central bank concluded its post-pandemic hiking campaign. However, inflation has now remained above the Fed's 2% target for more than five years, with the war in the Middle East serving as the latest driver of higher prices.

As Fed Chairman Kevin Warsh said in his Jackson Hole Symposium speech in August, "We have work to do."

Still, a hold isn't entirely off the table — even as traders price in a 92% chance of a Fed rate hike, according to CME Group's FedWatch tool. Federal Reserve Chairman Kevin Warsh has been adamant about not providing markets with forward guidance on interest rate decisions, preferring that officials have a "good family fight" over the data at FOMC meetings.

In addition to the intrigue over whether the Fed will hike rates, markets will closely scrutinize the Fed's Summary of Economic Projections, the so-called dot plot, for clues about monetary policy in the next few years.

"The FOMC meeting began at 9:00 AM ET as scheduled," a Federal Reserve spokesperson told Yahoo Finance.

Expectations of a rate hike have changed little since the meeting began yesterday. As of Wednesday morning, traders saw a 92.7% probability that the Fed will raise rates by 25 basis points, down slightly from the 93.5% odds set a day ago, according to CME Group's FedWatch tool.

As we await the Fed's decision — an expected hike — on interest rates later today, President Trump's reaction is one of the story lines we'll be following.

Among the president's most recent comments about interest rates was this surprising response to a jump in the US trade deficit.

"LOWER THE RATE OR I'LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT," Trump posted on Truth Social on Sept. 4, in what appeared to be a directive to the central bank.

Brace for minor market tremors if the Fed hikes interest rates, as many on Wall Street think will happen later today.

But if history holds up, any losses could prove short-lived.

The S&P 500 has declined by an average of 4.0% over the six weeks following the first Fed rate hike of a cycle across seven such episodes since 1988, per new analysis from strategists at The Kobeissi Letter.

Stocks recovered all of those losses over the next five to six weeks on average. In the six months following the first interest rate hike, the S&P 500 returned 4.0% on average. After 12 months, the S&P 500's average gain tallied +9.0%. Positive returns have occurred in every episode except 2022 over the twelve months.

"Fed rate hikes have historically been great buying opportunities," the strategists added.

While there's no way to predict the Federal Reserve's next move, the Fed has tools that investors and consumers can look to for insights. Among them is the Fed's dot plot, which shows where the Fed's policymakers see interest rates headed in the next few years.

The dot plot is a chart that shows how the Fed's top policymakers — members of the Federal Open Market Committee (FOMC) — think the Fed will change short-term interest rates over the next few years.

There are up to 19 dots on the Fed's dot plot, each one representing the prediction of one anonymous member of the Federal Reserve Board. Those predictions are updated at each FOMC meeting based on a review of what's happening with the economy and the outcomes each member believes are most likely in the future.

The Federal Reserve began publishing the chart in 2012 as part of an effort to increase transparency around its policies. The dot plot can now be found in the Summary of Economic Projections published each March, June, September, and December.

The Federal Reserve is expected on Wednesday to hike interest rates for the first time since 2023, a decision driven by stubbornly high inflation and a global rise in borrowing costs that will heighten scrutiny of how U.S. central bank chief Kevin Warsh describes the first monetary policy change on his watch.

But lifting the Fed's policy rate by a quarter ‌of a percentage point to the 3.75%-4.00% range is a step that has become almost inevitable, with inflation seemingly stuck above the central bank's 2% target, long-term global borrowing costs shifting higher, and Warsh facing doubts about his willingness to go against Trump's demands.

The pressing question now is how Warsh frames the policy decision, and whether ​global bond investors see it as a credible response to inflation that has been above target for more than five years and which has moved up since the start of Trump's current term in the White House.

The Federal Reserve is expected to lift interest rates on Wednesday for the first time since 2023 as policymakers lose confidence that inflation will cool sufficiently without at least a nudge from the central bank.

That's likely to strain Chairman Kevin Warsh's relationship with President Donald Trump.

Officials have held their benchmark rate steady in a range of 3.5%-3.75% since December as a majority of policymakers argued that progress in lowering inflation was being stalled by temporary factors.

Doubts over that stance have grown steadily this year within the Fed, and a recent hot inflation report appears to have tipped the scales in favor of at least one near-term rate increase. Investors on Tuesday saw a greater than 90% chance of a quarter-point move this week and priced in another hike by the end of the year.

The Federal Reserve periodically adjusts its target rate to keep the economy running smoothly and consumer prices in check.

When the federal funds rate moves up or down, so do the interest rates on bank accounts and loans. In other words, changes in the Fed's rate impact how much your savings can grow and how much you pay to borrow money.

So how does today's federal funds rate compare to past years? Here's a look at historical Fed interest rates.

No country should have lower interest rates than the U.S., President Donald Trump said on Sunday, days before the Federal Reserve's ‌next policy meeting.

Speaking to reporters at the Irish Open golf tournament, Trump said he did not know ‌whether Fed policymakers will raise interest rates at their meeting this week. But he said the U.S. "should be paying the lowest interest rate in the ​world" no matter what the Federal Reserve's data indicates about inflation and the economy.

The Labor Department's Consumer Price Index, a key measure of underlying inflation, on Friday posted its largest increase in four months. That reinforced expectations that the U.S. central bank will raise the target range for its federal funds rate, now at 3.5% to 3.75%, at the conclusion of ‌its Federal Open Market Committee meeting on ⁠Wednesday.

Price pressures remain elevated as the economy deals with Trump's import tax increases and surging energy prices tied to the Iran war. Many at the Fed worry that the longer ⁠inflation remains high, the greater the cost will be to get it back to target.

Fed Chairman Kevin Warsh may soon realize that giving less information to the markets on his thinking about interest rate policy — as he has been inclined to do — may not be the best course of action.

His legacy as Fed chair may ultimately be defined by whether he learns to adjust his communication with investors.

"I don't want to say what [Warsh will] have to do, but I would say that the market obviously likes more information," Carlyle (CG) co-founder and Warsh's friend David Rubenstein said in a new episode of the Power Players with Brian Sozzi podcast (see video above or listen below). "And so he may be able to do what he wants to do in time; it's too early to say. But he's a very smart, talented person, and I think the president picked a good person."

Few doubt Warsh's intelligence, but they are beginning to question what his leadership will mean for markets going forward. So far, it has been a somewhat rocky start leading the world's most powerful central bank.

Wall Street is overwhelmingly pricing in a quarter-percentage-point interest rate hike by the Federal Reserve at its meeting this week.

The question is whether Fed Chairman Kevin Warsh will unite with policymakers in favor of hiking rates or holding them steady.

"Kevin Warsh has a conundrum," Macquarie global macro strategists Thierry Wizman and Gareth Berry wrote in a recent note. They noted that he can either follow the White House's appeal to not raise rates or "go with the internal flow and accede to the majority's wishes for a hike."

"We think the second option is likelier," the strategists wrote. "Fed Chairs, after all, are there to help build consensus, but then vote with the majority."

Warsh has been mum about forward guidance. If he votes against a hike, he could become the first Fed chair in modern history to dissent from the majority.

The Federal Reserve will raise its interest rate on Wednesday and deliver at least one more hike by the end of March, according to a majority of economists polled by Reuters, reversing a fragile no-change consensus that prevailed before official data on Friday ‌showed firm inflation.

A run of strong economic data following Fed Chairman Kevin Warsh's Jackson Hole speech, widely perceived as hawkish, and prominent hike pricing from ‌markets already made several economists rethink rate-hold calls.

But a new regime under Warsh of no rate guidance, along with heightened uncertainty, had left few economists ready to commit.

Now, an 85% majority of economists, 86 of 101, ​in the Reuters survey conducted after Friday's inflation report said the Fed would raise rates by a quarter percentage point to 3.75%-4.00% at its September 15-16 meeting, the first increase since July 2023.

Oil prices (BZ=F, CL=F) are solidly back over the $100 per barrel mark. The August payrolls report showed the US economy added three times as many jobs as expected. Consumer pricing data showed "core" pricing ticking up faster than expected.

In other words, the case has grown increasingly strong for the Federal Reserve to issue its first rate hike in three years on Wednesday, as markets price in roughly a 90% probability of a quarter-point hike.

If equity market performance remains true to historical precedent, that could spell an upcoming trough for stocks, Goldman Sachs analysts led by Ben Snider wrote over the weekend.

Looking at history, the benchmark S&P 500 (^GSPC) index has seen an average three-month return of negative 2% at the start of a Fed hiking cycle throughout the past few decades, Goldman noted over the weekend.

The market has priced in a roughly 93% chance that the Federal Reserve will raise rates by 25 basis points at tomorrow's meeting as Kevin Warsh's FOMC attempts to get a handle on inflation.

That may disproportionally impact the bottom portion of America's "K-shaped" economy, raising debt servicing costs without providing legitimate relief, according to Mast Investments CIO Yung-Shin Kung.

"The primary mode through which hiking would work is by imparting greater stress on the bottom of the "K" which is already struggling through a supply shock," Kung wrote on Tuesday. "Hiking would be a high-sacrifice-ratio, poorly targeted tool that extracts most of its cost from people who aren't the source of the inflation problem."

Primary responsibility for the inflation crisis, Kung said, belongs to tariffs, the AI buildout, the oil supply stock, and stock market wealth accumulation — all of which he argues are better addressed through balance sheet adjustments by the Fed, not by moving rates. Raising rates doesn't create more oil, the argument goes.

Lower-income consumers would effectively see their wallets hit twice, Kung said. First, they must pay the increased prices seen on categories such as food and housing, "which a funds-rate hike barely touches." Then, tighter credit conditions make debt servicing more expensive.

Meanwhile, Kung said, "the real driver of any genuine excess demand sails through mostly unaffected."

Moody's Analytics chief economist Mark Zandi has a differing view from the 92% of Fed watchers who are betting on a rate hike this week.

"The odds of a serious Fed policy mistake are uncomfortably high and rising," Zandi posted on X on Monday.

"The economy is already growing near potential (2% real GDP growth) and operating at full employment (unemployment a bit above 4%). Inflation is too high, to be sure, running above 3%. But much of that is the fallout from higher energy prices and tariffs, supply shocks that rate hikes can't fix and that should fade on their own so long as inflation expectations stay anchored, as they have.

He continued: "If the Fed tightens to bring inflation down faster, it must push growth below potential, and that is hard to do without layoffs, rising unemployment, and igniting a self-reinforcing negative cycle."

Investment in artificial intelligence that is fueling the stock market is a further complication, Zandi argues.

"To hit its inflation objective, the Fed either needs to rein in the AI boom or put even more pressure on the rest of the economy. Neither is a good outcome," he wrote.

So what can the Fed do to avoid that? "Of course, it doesn't have to choose either. It can wait."

White House National Economic Council Director Kevin Hassett said Sunday that President Donald Trump's administration will "100 percent support" Federal Reserve Chair Kevin Warsh regardless of what the central bank decides on interest rates this week, even as Trump continues to press publicly for lower borrowing costs.

In an interview on CNN's "State of the Union," Hassett told host Jake Tapper that Trump respects Warsh's independence and trusts him to make decisions based on economic data.

"President Trump 100% respects the independence of Kevin Warsh," Hassett said. "He understands that he's a man of honor who will look at the data and then drive the committee to the right decision."

Markets overwhelmingly expect the Federal Reserve to raise interest rates this week for the first time in more than three years — but the decision is likely to be a closer call than investors' bets suggest.

"The probabilities in the market seem higher than I would necessarily assign at this point," Loretta Mester, former president of the Cleveland Fed, said in an interview. Mester pointed to recent arguments by key members of the Fed's rate-setting committee, New York Fed president John Williams and Fed Governor Chris Waller, suggesting that neither is convinced a rate hike is appropriate.

However, key inflation data released Friday boosted market expectations for a hike. The Consumer Price Index (CPI) for August showed monthly prices rose 0.3%, higher than the expected 0.2%, crossing a symbolic line in the sand drawn by a handful of Fed officials. Since Friday, traders have been pricing in between 85% and 90% odds that the Fed will raise 25 basis points.

… While the latest CPI data has made Adam Posen, president of the Peterson Institute for International Economics, less certain of a pause, he still thinks the central bank is more likely than not to hold rates steady.

"Ideally, the Fed should never be making up their minds based on one last-minute piece of data," Posen said. "This is why when you say 'I don't want to do forecasts,' it's self-defeating. Otherwise, you're just reacting to a backward-looking, inherently noisy reading."

The 10-year Treasury yield (^TNX) climbed as high as 5.04%, its highest level since 2007, on Tuesday. Meanwhile, the 30-year Treasury (^TYX) yield touched 5.39%.

The move higher in yields comes ahead of the Federal Reserve's rate decision this week. Investors have priced in a 25 basis point rate hike following the Fed's FOMC meeting on Wednesday, with a 92% likelihood.

Bond yields remain high as oil prices (BZ=F, CL=F) have firmly moved above $100 per barrel, raising concerns that inflation will remain above the Fed's 2% target.

The Federal Open Market Committee's September meeting kicked off on Tuesday on schedule.

"The FOMC meeting began at 10:30 AM ET as scheduled," a Federal Reserve spokesperson said.

On Wednesday, at 2 p.m. ET, the Fed will issue its monetary policy statement and interest rate decision. As of Tuesday, bond traders were pricing in a roughly 92.7% chance that the Fed will hike interest rates at the end of its meeting, according to CME Group's FedWatch.