Fed Rate Moves Unpacked: How Holding, Cutting, and Hiking Shape Global Markets

Real-World Examples from Recent History Reveal the Macro and Financial Market Impact of Every Fed Decision

With the FOMC set to announce its latest policy decision tomorrow, understanding how the Federal Reserve’s choices on interest rates can ripple through global markets is top of mind for investors. While the Fed is not the only central bank shaping the world’s financial landscape, it remains the most influential, and its decisions are watched closely across the globe.

The Fed faces a complex environment: inflation has moderated from its recent peaks, but economic growth is showing signs of slowing, and financial markets remain sensitive to policy shifts. Adding to the complexity are ongoing debates about the Fed’s independence, as recent political pressures and public commentary have raised questions about whether monetary policy decisions are being made free from outside influence. Against this backdrop, let’s examine how different Fed rate decisions—holding steady, reducing, or increasing—have impacted markets in recent history, and what that could mean for tomorrow’s outcome.