Fed Hikes Rates to 4.00% as Market Awaits Next Move

The Federal Reserve has raised its interest rates for the first time in three years, moving policy into a more restrictive range. The Fed's main rate is now at 4.00%, up from 3.75%. Markets traditionally consider a rate above 4.00% to be restrictive.

The US Dollar Index rose by 0.70% following the decision and has yet to form a bearish correction. Gold fell more than 3.00% but has since risen by 1.40%. The S&P 500 initially declined almost 1.60% but has mostly regained its losses.

The Fed's dot plot, which outlines future interest rate projections, shows that 16 of 18 policymakers expect at least one additional 25-basis-point hike before the end of 2026. This indicates a further hike in the near future.