Greenlit’s Weekly Digest: The Fed Raises Rates and Warns of More Pressure Ahead

September 18, 2026

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2–3 minutes

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Economic Note

The FOMC meeting is done and the Federal Reserve raised their interest rates by 25 basis points this week, bringing the target range to 3.75%–4.00%. The move was widely expected and largely already reflected in market pricing.

The bigger story was the outlook beyond this meeting. The Fed signaled that another rate hike could still come before the end of the year, pushing the projected peak toward the 4%–4.25% range. Even more importantly, expectations for 2027 have become less optimistic. Back in July, markets were beginning to anticipate that the Fed could start lowering rates again in 2027. Now, policymakers appear more concerned that rates may need to remain elevated—or potentially move higher—for longer.

For the housing market, that creates another year of pressure from high borrowing costs. Mortgage rates are currently around 7.19%, and those rates have a much more direct impact on buyers than the Fed’s policy rate itself.

Historically, the fall market tends to slow, but the bigger concern this year is the level of mortgage rates. When rates were around 7% two years ago, the housing market experienced one of its weakest sales periods in generations. If rates remain elevated through the rest of this year, we could see a similar pattern: buyers pulling back from their searches, affordability deteriorating further, and transaction volume weakening into the final quarter.

The next major domestic release to watch is the PCE inflation report on September 30. Until then, markets will likely remain focused on global news, bond-market movement, and any additional signals from Federal Reserve officials.

Bottom line: The quarter-point hike was expected. The more important message is that the Fed is preparing markets for higher-for-longer rates, with another potential hike this year and less confidence that rate cuts will begin in 2027. If mortgage rates remain near 7% through the fall, many buyers may decide to pause or leave the market altogether.