Kasikorn Research Center assesses that the US Federal Reserve, or the Fed, is likely to raise interest rates at least one more time this year, after the FOMC meeting on September 15-16, 2026 voted unanimously to raise rates by 0.25% to a range of 3.75-4.00%, the first increase in more than three years. The Fed views inflation as still elevated, the economy as still expanding well, and financial conditions as not yet sufficiently tight. The Fed also revised up its forecasts for economic growth and inflation this year, while the median Dot Plot indicates the Fed may raise rates one more time this year and hold them at around 4.1% next year. Kasikorn Research Center sees the Fed as having sent a hawkish signal, and therefore expects at least one more rate hike this year amid still-high inflation and geopolitical uncertainty, with rates likely to stay elevated next year if the US economy continues to expand well and inflation remains above the 2% target.
Fed unanimously hiked rates 0.25% to 3.75-4.00% and signaled at least one more hike this year, pushing the effective fed funds rate higher.
Hawkish Fed stance with further rate hikes expected lifts the 10Y Treasury yield (bond prices fall).
