Fed Chair Kevin Warsh and the FOMC raised the federal funds rate by 25 basis points to 3.75%-4.00% on September 16, the first hike since July 2023, signaling more increases ahead as the central bank pursues faster progress toward its 2% inflation target. Stock markets reacted negatively, with the Dow falling over 1%, though historical patterns suggest outcomes may differ from initial expectations.
Federal Reserve Chairman Kevin Warsh raised the federal funds rate by a quarter point in his third FOMC meeting, marking the first rate hike since 2023. Historically, rate-hiking cycles trigger an average 14% drawdown in the S&P 500 within 12 months, though the decline may not occur immediately and recovery typically follows as markets digest the effects on corporate earnings and inflation.