The Federal Reserve's September 16, 2026, decision to raise the federal funds target range by 25 basis points to 3.75%-4.00% marks the first hike since 2023 and reflects persistent inflation pressures above the 2% goal alongside resilient economic growth. Updated dot-plot projections showed a strong majority of policymakers expecting at least one additional increase by year-end, with the median path implying a 4.00%-4.25% range through 2027 amid upward revisions to core PCE forecasts. Market-implied odds via futures have shifted sharply toward further tightening, pricing roughly an 80-90% chance of another hike before December while downplaying near-term cuts. Key upcoming catalysts include October and December FOMC meetings, along with incoming CPI, PCE, and employment data that will test whether inflation momentum justifies sustained policy restraint.

Sep 17 2026

Strong economic data and Fed hike reduce odds of January 2027 rate cut

January 2027 Meeting plunges to 11%39%

The combination of the Fed's September hike and robust economic indicators led to a steep decline in market pricing for a rate cut at the January 2027 meeting, with contract prices falling from 50% to 11%. This reflects a market consensus that cuts in early 2027 are unlikely.

Sep 17 2026

Markets react to Fed rate hike with sharp decline in rate cut probabilities

December 2026 Meeting dips to 3%4%

Following the September 16 rate hike, market prices for rate cuts at the December 2026 and subsequent meetings dropped sharply, reflecting diminished expectations for easing in the near term. This was evident in the December 2026 meeting contract price falling from 7% to 3% and similar declines in other meetings.

Show more