The FOMC raised the federal funds rate to 3.75%-4.00% on September 16, signaling a new tightening cycle that is expected to influence consumer borrowing costs and Treasury yields.
The federal funds rate hike influences Treasury yields, with higher rates generally putting downward pressure on bond prices.
The Federal Open Market Committee (FOMC) has initiated a new interest rate cycle, raising the federal funds rate by 25 basis points to a range of 3.75% to 4.00%. This move marks a shift in policy as the Fed seeks to manage economic conditions, with traders anticipating at least one additional rate increase before the end of 2026.
It is the interest rate range set by the Federal Reserve for depository institutions to charge each other for ultra-short-term, overnight loans.
Rate hikes trickle down to consumers by increasing interest rates on credit cards, auto loans, and student loans, while potentially raising yields on savings accounts and CDs.