US Federal Reserve Set to Hike Interest Rates Amid Inflation Concerns

The US Federal Reserve (Fed) is set to conclude its two-day meeting on September 16, where investors expect the first rate hike since July 2023. The decision will be announced at 21:00 Kyiv time, and markets have largely priced in a 25-basis-point rate hike to a range of 3.75-4.00%.

Ahead of the meeting, inflation risks have increased, with August's consumer price index rising 0.4% month on month, and core CPI increasing 0.3%. Producer prices also remain high, creating a risk of another pass-through of costs into consumer prices.

The Fed's updated economic projections, known as the dot plot, will be closely watched for any indication of further rate hikes in 2026-2027. If the Fed indicates it is prepared for several further hikes, US Treasury yields may remain high, and the dollar could receive additional support.

For stock markets, a higher rate means more expensive financing for businesses and higher alternative yields on bonds. This puts pressure primarily on companies with high valuations and substantial capital needs.