The Federal Reserve raised its benchmark overnight interest rate by a quarter percentage point to a target range of 3.75% to 4.00% on Wednesday, in a unanimous 12-0 vote by the Federal Open Market Committee. The central bank signalled that at least one more increase could follow, as policymakers raised their near-term inflation forecasts and emphasized that inflation remains elevated.
According to the FOMC statement, economic activity is expanding at a solid pace, with resilient domestic spending, strong productivity growth and robust capital investment. However, officials noted that inflation is still above the Fed's 2% objective and that the latest policy action would support a more timely return to that target. The Fed's projections showed that 16 of 18 participants expect at least one more rate increase, while four see the possibility of two additional hikes; two expect policymakers to stop after Wednesday's move.
Fed Chair Kevin Warsh said monetary policy cannot directly lower oil prices or address supply disruptions, adding that the central bank would seek to prevent changes in relative prices from spreading into broader inflation. Officials raised their 2026 inflation forecasts, with headline PCE inflation now projected at 3.7% and core PCE inflation at 3.4%, both 0.1 percentage point higher than June projections.
US equities closed lower following the decision. The Dow Jones Industrial Average lost 630 points, or 1.2%, while the S&P 500 fell 0.5%; the Nasdaq Composite ended near flat. Financial stocks declined, with Bank of America and Wells Fargo each down 3%. The 10-year Treasury yield moved back above 5% during Warsh’s remarks.
In commodities, oil prices retreated as reports of additional Saudi crude cargoes through Oman eased concerns about Middle East supply disruptions. Brent crude fell 3% to $105.45 a barrel, while West Texas Intermediate declined 3.62% to $102. Gold reversed earlier gains after the Fed decision: spot gold fell 0.69% to $4,263.22 an ounce, while US gold futures for December settled 0.65% lower at $4,304.50. Silver fell 1.7% to $62.57 an ounce, platinum declined 2.3% to $1,735.33 and palladium dropped 1.5% to $1,269.95.
Although the reports do not mention cryptocurrencies directly, the combination of higher US rates, a stronger dollar and risk-off sentiment in equities and commodities may have a broadly negative macro influence on digital asset markets, especially by tightening global liquidity conditions.
