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Traders see >90% chance of Fed rate hike Sept. 16 as inflation remains above 2% target, defying Trump's calls for cuts.
The Federal Reserve is poised to raise interest rates on September 16, defying President Donald Trump's repeated calls for lower rates and potentially adding to midterm election anxieties for Republicans [1, 2]. Traders surveyed by CME Group's FedWatch Tool on September 14 saw a greater than 90% probability of a rate increase, a move aimed at taming inflation that has remained above the Fed's 2% target for five years [1, 2].
| At a glance | |
|---|---|
| Expected Rate Hike | 0.25% |
| Current Target Range | 3.5% - 3.75% |
| Implied New Range | 3.75% - 4.0% |
| Inflation (12-month) | 3.4% |
| Trade Deficit (July) | $88.6 billion |
The Federal Open Market Committee's potential rate hike comes as inflation, driven in part by rising gas prices, increased by 3.4% over the past 12 months as of September 11, outpacing wage growth [1]. Fed officials, including Governor Michael Barr, have signaled a willingness to raise rates if inflation does not show sufficient moderation [2]. Barr noted that progress in bringing inflation down from over 7% in 2022 to just above 2% in 2024 has stalled, citing shocks from tariffs, Middle East conflict, and AI buildout as contributing factors [2]. Fed Chair Kevin Warsh also delivered a clearer warning in late August that stubborn inflation could push the Fed toward a rate hike, a shift from his earlier stance of deliberate ambiguity [3]. The committee has not voted to raise rates since July 2023, having lowered them three times late last year and holding them steady so far in 2026 [2].
President Trump has consistently pressured the Fed to lower interest rates, arguing that lower rates are essential for a strong economy and that the U.S. should have the lowest rates globally [1, 2]. His calls have intensified in the seven weeks leading up to the November midterm elections, where Republicans' control of Congress is at stake [1]. Trump has also threatened to halt trade with nations experiencing trade deficits, a move that increased by $17.4 billion from June to $88.6 billion in July, according to a September 3 report [1]. Analysts suggest this threat is intended to create economic chaos if the Fed does not comply with his rate demands [1]. Despite Trump's assertions, his economic adviser, Kevin Hassett, stated that the Fed should remain independent and that Trump would "accept" a rate increase, while still preferring a reduction [1]. Consumer sentiment has reportedly declined, with year-ahead expectations for personal finances and business conditions plunging amid rising fuel prices and trade tensions [1].
The Fed's decision to raise rates, if it occurs, will signal a commitment to its inflation mandate despite political pressure, potentially intensifying the economic debate heading into the midterm elections.
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AI-assisted synthesis by the TrendWatcher Editorial Desk · sourced from 3 outlets · Sep 17, 2026 · How we report
The Federal Reserve increased Fed Rates to combat persistent inflation that remains above the central bank's 2% goal. Chairman Kevin Warsh cited elevated inflation, a strong labor market, and economic pressures stemming from the war with Iran as primary drivers for the decision.
Fed Rates have a direct impact on credit card bills because most cards carry variable interest rates tied to the prime rate. As the federal funds rate rises, the prime rate increases, which typically causes credit card APRs to rise within a few billing cycles.
Fixed-rate mortgages are generally not affected by immediate changes to Fed Rates because they track the yield on the 10-year Treasury note and broader bond-market conditions. However, mortgage rates on new home loans may increase if bond yields rise in response to inflation expectations.
Fed Rates influence the interest paid on savings accounts, meaning that as the federal funds rate increases, banks often raise the rates offered on high-yield savings accounts and certificates of deposit. Consumers can expect better returns on these accounts following the September 2026 rate hike.