Fed raises interest rates for the first time in over three years

The Federal Reserve raised its federal funds target rate by a quarter point to a range of 3.75% to 4.00% at its September 16 meeting, its first rate hike in more than three years and a sharp reversal after three consecutive cuts to close out 2025. The move came as the 10-year Treasury yield pushed toward 5%, oil prices surged amid the ongoing US-Iran conflict, and inflation data came in hotter than expected.

The decision was largely priced in by markets beforehand, with fed funds futures showing more than a 90% probability of a hike heading into the meeting. Investors were left weighing how persistent the shift in tone might prove: strategists noted that the approach toward the 5% threshold on 10-year yields has historically marked a meaningful inflection point beyond which higher rates tend to become a more lasting headwind for stocks, even as corporate earnings had so far continued to offset the drag.