FED Raises Discount Rate, Driving Up Capital Costs and Bond Yields
What happened
The Federal Reserve raised its discount rate on September 22, 2026, contributing to higher capital costs for businesses and financial markets. Following this action, Treasury bond yields reached 5%, the highest level in nearly two decades.
From yahoo.com
Why it matters
The rising risk-free interest rate component of the cost of capital is expected to increase overall capital costs. This trend, combined with rising utility operating costs, raw materials, and fuel prices, suggests inflation may be returning.
The Federal Reserve's interest rate policy is currently impacting the business financing costs for NFIB.
From yahoo.com
Who's involved
- FEDThe main subject that raised the discount rate and executes monetary policy.
- Federal Open Market CommitteeThe mandated policy-setting body through which the Federal Reserve executes its monetary policy.
- Jerome PowellThe formal Chair and leader of the Federal Reserve.
- Christopher WallerA Governor of the Federal Reserve, providing expert counsel and influencing monetary policy.
- SchmidHolds a formal leadership role within the Federal Reserve, influencing its monetary policy.
Who could feel it
Possible knock-on effectsThese are possibilities Brind reasoned out, not predictions, and not advice. Most are not stated in any report.
- FEDSpeculative
Consumers might face higher rates as increased costs of capital are passed along to them.
Keep exploring
The entities involved
-
FED
business
Related events
- Market pricing of future rate hikes is being observed.
- Rate hikes are affecting financial products and market returns due to actions by the FED.
- Fed actions are affecting interest rates and DNII growth, involving Main Street Capital.
- The Federal Reserve has raised the benchmark interest rate to the target range of 3.75% to 4%.
- Expert analysis suggests that raising interest rates affects state borrowing costs in Illinois due to FED policy signals.