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Fed Hikes Rates by 25bps as Expected; Cathay United Bank Warns of Potential December Increase
Finance · Major Banks · cnyes · 2026-09-17
The Federal Reserve has raised interest rates by 25 basis points, with analysts at Cathay United Bank suggesting another hike may be likely in December if inflation remains persistent.
What Happened
Fed Policy Decision: The Federal Reserve concluded its FOMC meeting by raising the federal funds rate target range by 25 basis points to 3.75%-4.0%. Cathay United Bank analysts noted that this move aligns with market expectations and signals that further hikes are possible in December if core inflation remains above target.
Market Outlook: While tech sector earnings remain robust, the bank warns that high interest rates, upcoming elections, and cautious AI spending could lead to increased market volatility through the end of the year. Bond yields are expected to remain elevated due to rising issuance volumes and ongoing monetary tightening.
Currency Trends: Expectations of further rate hikes are providing support for the US Dollar index, helping to stabilize its performance after a weak second half. However, with global central banks also tightening policy, the dollar is expected to consolidate near the 100 level in the near term.
Strategic Stance: Cathay United Bank highlighted that the Fed is shifting toward a policy stance that focuses on long-term macroeconomic trends rather than short-term data fluctuations. This approach is intended to anchor inflation expectations and ensure a more stable economic trajectory.