Will US Federal Reserve raise key interest rates for the US economy? Here’s what investors should know

The US Federal Reserve started its two-day September monetary policy meeting on Tuesday, September 15, as global market investors now focus on the Federal Open Market Committee’s (FOMC) upcoming decision and the way forward for the economy amid bets of an interest rate hike.

As per the official schedule, the US Fed’s FOMC’s meeting started on Tuesday, September 15, and is set to end on Wednesday, September 16, after which the central bank will release the outcome at 2:00 pm (ET) through an official statement.

The central bank has kept its key benchmark interest rates for the US economy on hold for the last nine months, maintaining the rates at the range of 3.50% to 3.75% while the policymakers attempt to analyse the sticky inflation situation due to the elevated oil prices.

In the December 2025 policy meeting, the US Fed under former Chairman Jerome Powell cut its interest rates by 25 basis points (bps).

Although the new Fed Chairman Kevin Warsh has so far refrained from sharing an indication or projection for the interest rates trajectory, the central bank governor sounded concerned about the inflation situation in the American economy.

Will US Fed hike rates this time?

US-based market exchange operator, CME Group’s FedWatch data indicated that the market experts are predicting that there is a 92.5% probability of the US Federal Reserve increasing the key benchmark interest rates for the US economy to the range of 3.75% to 4.00%.

However, there is also a chance that the experts predict a 7.5% probability of the FOMC keeping the interest rates unchanged at the range of 3.50% to 3.75%, according to the CME FedWatch.

With the elevated inflation level above the central bank’s target of 2% and the resilient job market, Federal Reserve has to find a balance between their double mandate while determining the interest rates and factoring in the elevated energy prices and US Treasury yields at record high.

Considering the current volatility and the situation of the market, investors exercise caution while predicting an upcoming rate hike for the US economy in the September 2026 policy outcome.

The US Federal Reserve’s dot plot indicates a projection of the median interest rate of the US economy in the range of 3.75% to 4.00%, indicating that the central bank is likely to raise rates in the upcoming period.

When will US Fed announce policy outcome?

US Federal Reserve Chairman Kevin Warsh-led FOMC is set to announce the outcome of the two-day monetary policy meeting at 2:00 pm (ET) on Wednesday, September 16, which will be 11:30 pm (IST) for people tracking the policy action from India.

The official statement from the FOMC will be followed by a press conference where Chair Kevin Warsh will address the media starting at 2:30 pm (ET), which is 12:00 am (IST) on Wednesday midnight.

If people tracking the update are interest to watch the US Fed press conference on Wednesday at midnight, they can tune in to the live telecast on the official website or the official YouTube channel of the US Federal Reserve.

162,000 jobs added in August

Data collected from the Bureau of Labor Statistics (BLS) showed that the total non-farm payroll employment increased by 162,000 in the 12-month period ended August 2026, indicating healthy job growth in the economy.

“Employment increased in food services and drinking places and in local government education. The information industry lost jobs,” according to the BLS release on September 4.

The data also showed that the US unemployment rate was unchanged at 4.1%, with the number of unemployed witnessing a marginal change at 7.0 million people, as per the official filing.

US inflation steady

BLS data also showed that the CPI inflation rate of the US economy was steady at 3.4% as of the 12-month period ended August 2026, in line with market expectations amid the rate hike bets.

The inflation rate for the US economy has remained near stable levels since June 2026. The data showed that CPI inflation was at 3.4% in July and 3.5% in June, prior to which the inflation rate spiked to 4.2% in May 2026 due to the impact of the West Asia crisis.

Since the beginning of the US-Iran conflict in West Asia, CPI inflation in America has been a concern for policymakers as the rising cost of energy sources and the higher cost of imports weigh on the economy.