Next Wednesday, the Federal Reserve may raise interest rates, and the futures market now puts the probability at roughly 70 percent. If you have been waiting for cheaper financing, or deciding how long to keep money in short term investments, this meeting is of interest. Expectations shifted further toward a hike after this week's producer price report added to concerns about inflation.
The federal funds target range has remained at 3.50 to 3.75 percent throughout the year. At the July meeting, the committee voted 9 to 3 to hold, and the three members who voted no wanted an increase, not a cut. The question now is whether the Fed can give inflation more time to ease or needs to raise rates to bring it down.
At Jackson Hole on August 28, Fed Chair Kevin Warsh acknowledged that summer's inflation readings had been better than expected, but added that "they do not tell me that underlying trends have meaningfully improved." His concern is that recent improvements may not be enough to restore price stability. Higher energy costs associated with the Middle East conflict add to that concern because they can feed into transportation, materials, and other business expenses.
Longtime Wharton finance professor Jeremy Siegel, made an argument this week that caught my attention. He wrote that "the economic case for a 25-basis point hike is strong," pointing to expanding money and credit as evidence that current policy may be less restrictive than it appears. His argument is that borrowing should be slowing more noticeably if interest rates are doing enough to restrain demand.
The labor market also looks sturdier than the earlier reports suggested. August payrolls increased by 162,000, while revisions turned July's initially reported loss of 23,000 jobs into a gain of 21,000. The revisions added 55,000 jobs across June and July combined, and unemployment held at 4.1 percent. Those figures give the Fed more room to focus on inflation, although annual wage growth of 3.1 percent offers some reassurance that pay increases are not accelerating.
The argument for holding rates rests partly on the inflation improvement already underway. Governor Christopher Waller pointed on September 3 to core PCE inflation, which excludes food and energy, slowing from a three month annualized rate of 4.76 percent in February to 3.05 percent through July. He was willing to support holding rates if that progress continued, but attached a clear condition: "But if inflation comes in hot, I would consider a rate hike." His position shows why Friday's consumer price report carries so much weight in this decision.
The August Consumer Price Index report provides the last major consumer-inflation reading before the meeting. It will give officials more evidence about whether the recent improvement is continuing, although one report cannot establish a lasting trend. The disagreement is over how much progress the Fed has made and whether that progress is convincing enough to justify waiting.
What does a rate hike mean if you own a business?
The NFIB's small business survey, released Tuesday, captured a tension that feels familiar to me. Sixty eight percent of respondents rated their own business as good or excellent, even as overall optimism declined and uncertainty remained elevated. NFIB's researchers linked that uncertainty to weaker investment activity. Confidence in a company can coexist with hesitation about taking on a major commitment.
A quarter point increase, on its own, won't change most decisions. The direction is the bigger issue: a plan that depends on cheaper financing has been waiting since December. If you postponed an equipment purchase or expansion because you expected that cheaper financing, this is a good time to rerun the numbers at today's rates. For a loan tied to prime or another short term benchmark, a Fed increase could mean higher payments, depending on the terms. The analysis should also leave room for weaker sales or unexpected expenses, so you can judge whether the investment fits the business without depending on lower rates to make it work.
If you carry substantial floating rate debt, ask your lender what fixing some portion of it would cost. Fixed rates already reflect market expectations, so getting a quote helps you compare the price of predictable payments with the uncertainty you would otherwise continue to carry. Either way, you are deciding with a number in front of you instead of a guess. Look at the loan's fees and repayment terms alongside the interest rate, particularly if you expect to sell, refinance, or pay down the debt.
What does it mean if you are drawing on your portfolio?
Short term Treasury bills can provide income while keeping maturities close at hand, but that income has to be renewed as each bill matures. If rates are lower when the proceeds are reinvested, the same amount of money will earn less. That becomes important when short term investments are supporting spending needs that extend well into the future.
Meanwhile, the 10 year Treasury yield has approached 5 percent, reaching levels last seen in 2023. For someone planning retirement income, higher starting yields create an opportunity to consider securing some income for later years. Whether that makes sense depends on when the money will be needed and how much flexibility the portfolio should retain.
Higher yields do not prevent losses if market rates continue to rise after you buy. Both individual bonds and bond funds can decline in value, although an individual Treasury note has fixed interest payments and a known maturity date when its face value is repaid. A conventional bond fund also provides income, but its distributions can change and it generally has no fixed date when your principal is returned. Those differences come into play when matching investments to future spending, especially if you might need to sell before an individual bond matures.
The Fed will announce its decision at 2 p.m. Eastern next Wednesday. For business owners, this is a good time to revisit the borrowing costs behind a planned purchase or expansion. For anyone drawing on a portfolio, it is worth looking at how much future income depends on short term rates staying where they are. An expansion may still make sense at today's rates, and a retirement plan may benefit from securing some income for longer. Those decisions deserve a closer look at the numbers, the timing, and the flexibility you need. None of them requires predicting what the Fed will do. They can be made with your own numbers, whatever the committee decides with theirs.
Frequently asked questions
Should I fix my floating-rate debt before Wednesday?
There is no guaranteed advantage to fixing your rate before Wednesday's announcement. Fixed rates already reflect market expectations, but those expectations can change, so a quote today may differ from one next week. Ask your lender how long the quote is valid, and compare the cost of predictable payments with the uncertainty of keeping a floating rate. Fees, prepayment terms, and how long you expect to carry the debt should all enter that decision.
If the Fed raises short term rates, will long term rates rise too?
Not automatically. The Fed sets a target range for the overnight federal funds rate, while markets set longer term yields, and markets have already pushed the 10 year Treasury near 5 percent this year. Long-term yields can even fall after an increase if expectations about inflation, growth, or future policy shift, though that is one possible outcome, not something to count on. Treat the two as related but separate when thinking about mortgages, long term borrowing, or bonds.
What does a higher rate environment mean if I plan to sell my business in the next few years?
Many buyers use debt to finance acquisitions, so their cost of capital shapes what they can pay and how deals get structured. How much any single rate change affects a company's value depends on the buyer's financing, required return, and the company's cash flows. A sustained higher rate environment can influence valuation multiples, how much of a purchase is financed, and how deal terms are negotiated. If a sale is on your five year horizon, interest rate assumptions belong in that plan alongside revenue and margins.
Is keeping cash in Treasury bills still reasonable?
Generally yes, when the maturities line up with when you plan to spend the money, and today's yields are a genuine benefit. Treasury bills mature within a year, so funding a need two or more years out involves reinvesting along the way. If you reinvest the proceeds when a bill matures, the new investment will earn the rate available then, which is the risk for income that needs to last a decade or more. Money needed before a bill matures may require selling at the prevailing market price.
Do I need to do anything before the announcement?
The meeting by itself does not create a reason to change a sound plan. The exceptions are deadlines you already have: a loan quote about to expire, a closing on the calendar, or a near term cash need. Outside of those, rerunning borrowing numbers, pricing a fixed rate option, and reviewing how your future income is built can happen on your own timeline.
This commentary is for informational purposes only and does not constitute investment, tax, or legal advice. Information and market figures are as of September 10, 2026, and may change. The views expressed reflect current opinions and are not guarantees of future results. Investing involves risk, including possible loss of principal. HWM Wealth is a registered investment adviser in Atlanta, Georgia.
