Fed Hikes Rates for First Time Since July 2023

The Federal Reserve made its first interest rate hike since July 2023 on September 16, raising rates by 25 basis points to 3.75% to 4%. This move was unanimous and caught many traders off guard.

The bigger surprise was the forecast attached to the decision, which showed that 16 of 18 officials now expect at least one more hike before the year ends. This implies that the tightening cycle may have only just started.

Australian traders are also watching the Reserve Bank of Australia's (RBA) meeting on September 29, where markets price a 90% chance of a rate hike to 4.60%. A local increase would add pressure to rate-sensitive sectors while offering some support to lenders.