What happened
The US Federal Reserve raised its benchmark interest rate by 0.25% to a target range of 3.75% to 4.00% at its September 2026 meeting, marking its first rate increase since 2023. Alongside the decision, updated economic projections showed officials expect stronger US economic growth, low unemployment, and just one additional rate hike before reaching the terminal cycle rate.
Why it matters here
US monetary policy directly impacts global asset pricing, bond yields, and the Australian dollar exchange rate. Higher US interest rates maintain upward pressure on global borrowing costs, but the Fed's expectation that inflation will return toward its 2% target without causing severe economic weakness provides reassurance to equity markets and international investors.
What to watch
Upcoming US economic data prints, including monthly non-farm payrolls and consumer price inflation figures, to confirm whether the Fed delivers its final projected rate increase.
Source
morgans.com.au