Fed Hikes Interest Rates Amid Soaring Energy Prices

September 18, 2026 marked a significant shift in monetary policy as the Federal Reserve (Fed) raised its benchmark interest rate by 25 basis points to 3.75%-to-4.00%, the first increase in over three years.

The decision was driven primarily by soaring energy prices, which have more than doubled since the summer, from an average weekly price of less than $70 per barrel to above $100 this week.

Chairman Kevin Warsh highlighted the changed 'geopolitical' backdrop as a major factor, citing the ongoing Iran conflict and tariffs, in addition to the Fed's survey members indicating a long-run funds rate at 3.25%.