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2026-09-17 18:16:09
[Fed Rate Hike Implemented, Consumer Credit and Corporate Financing Costs Face Upward Pressure] ⑴ The Federal Reserve raised interest rates by 25 basis points for the first time in three years, increasing the interest rate range to 3.75% to 4%. Against the backdrop of Middle East conflicts driving up energy prices and potentially more persistent inflation, consumer borrowing costs face upward pressure. ⑵ Some economists point out that credit costs will rise along with the prime lending rate, and loan pricing will adjust accordingly. Savings and credit unions and some banks use the prime lending rate as the starting point for loan pricing, and deposit rates may also be slightly adjusted accordingly. ⑶ The economist stated that while this adjustment may not be significant, it will put pressure on bank profit margins. ⑷ Some institutional executives believe that in addition to credit cards, personal loans, auto loans, and housing credit lines being affected, corporate financing costs will also rise across the board, from operating credit lines to new corporate bond issuances. ⑸ The executive emphasized that the market is more focused on the interest rate path outlined in the latest summary of economic projections than on the rate hike itself, which shows that the Fed is more cautious than it was in June. (6) The average federal funds rate forecast for 2026 and 2027 is now around 4.1%, up from approximately 3.8% and 3.6% respectively in June, implying that the Fed expects to maintain higher interest rates for a longer period. (7) The long-term interest rate forecast has risen from approximately 3.1% to approximately 3.2%, a subtle change indicating that the Fed considers the neutral interest rate level to be slightly higher than before. (8) The executive pointed out that this signals to the market that although the Fed has begun cutting rates since 2025, the future path will be more gradual and less generous than expected, and the Fed is facing the dilemma that the economy can withstand higher interest rates while inflation is so stubborn that it necessitates further rate hikes.
