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Fed Signals Further Rate Hikes as Investors Brace for Higher-for-Longer Environment

Abu Dhabi, United Arab Emirates – September 2026: The US Federal Reserve has signalled that its latest interest rate hike is unlikely to be its last, with 16 of 18 officials expecting at least one further increase this year and four anticipating two more.

Commenting on the latest FOMC interest rate decision, Lale Akoner, Global Market Strategist at eToro, said: “The Fed is telling markets not to get too comfortable, as the latest hike probably will not be the last. Sixteen of 18 officials expect at least one more increase this year, and four see two more. If inflation stays sticky, there is still room for rates to go higher.

“What matters just as much is where rates eventually settle. The Fed now sees them at around 3.2%, even once inflation is under control. That points to a world where cheap money does not come back quickly. Strong consumer demand and the sheer amount of investment going into AI may be part of the reason the economy has been able to live with higher rates.

“Consumers will feel that through more expensive credit cards and auto loans. It may take time to show up in the wider economy, but higher borrowing costs should eventually take some heat out of spending and hiring.

“For investors, cash and short-term bonds suddenly look more competitive. That is a tougher backdrop for stocks and crypto, particularly expensive growth companies where much of the value sits in profits expected years from now. AI companies can still benefit from strong investment, but at these valuations, there is less room for things to go wrong.

“Investors should expect a bumpier ride around inflation, jobs and spending data. In this environment, strong balance sheets and reliable profits matter more.”

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