Fed Raises Rates and Signals Another Hike

The Federal Reserve raised its target rate Wednesday by a quarter percentage point to 3.75%–4.00%, its first increase since 2023. The vote was unanimous. Officials said inflation remains elevated, while domestic spending is resilient, and their median projection put the year-end rate at 4.1%, implying another increase.

For the Fly High universe, higher overnight rates can support floating-rate asset income for BDCs, but they also raise borrower interest expense, refinancing pressure, and funding costs. Mortgage REITs may benefit from wider asset yields only if hedging, funding, and book-value effects remain manageable. The decision alone does not establish stronger or weaker dividend capacity; earnings remain the primary signal.

Watch incoming inflation and employment data, plus market funding conditions, for evidence that the projected second increase is becoming more likely.

Sources

• Federal Reserve: September 16 FOMC statement
• Federal Reserve: September economic projections
• Associated Press: Fed raises rates for the first time since 2023

This article is general information, not personalized investment advice. Fly High Investing may hold securities discussed in this article.