🛑 The Fed is Hiking Rates Again… Why? And What Does It Mean for You?

Nathan E. Zimmerman, AWMA

September 18, 2026

Here we go again, the Federal Reserve is back in the spotlight. This week, they voted to raise interest rates to fight inflation.

They think they are helping. I think they are wrong—and everyday working Americans are the ones paying the price. Here is what is actually going on, why their plan makes no sense, and how it hits your wallet.

🔎 Why is the Fed Raising Rates?

The Federal Reserve Open Market Committee (FOMC) is a committee of 12 folks whose main job is to keep the economy stable by managing employment and keeping inflation low. When things get out of hand, their favorite tool is changing the Federal Funds Rate.

Think of this rate as a giant brake pedal for the U.S. economy. When the Fed raises the rate they're effectively pressing down on the brake pedal. It triggers a chain reaction that makes it more expensive for banks to lend money. The goal is to force regular people and businesses to borrow and spend less, which theoretically cools down the economy and lowers prices.

⚠️ Why the Fed is Dead Wrong

In my opinion the FOMC has it wrong, again, for a couple of reasons:

1. The economy isn't even speeding

You'd tap the brakes when you’re doing 80 mph in a 55 mph zone. But look at U.S. economic growth (GDP) over the last three quarters:0.5%, 2.1%, and 1.5%. Not exactly overheating by any means. The economy is already driving right at—or below—the speed limit. Why would we press on the brakes?

2. Higher interest rates don't fix energy prices

At the start of 2026, inflation (CPI) was at a comfortable 2.4%. Then in March war broke out in the Middle East, disrupting the global oil supply. Here in Indiana gas jumped from about $2.50 a gallon in January to nearly $4.00 a gallon today, and diesel skyrocketed from $3.50 in January to over $6.00 today.

Energy is the common denominator for everything. It powers the factories that make goods and the trucks that ship them. When fuel costs rise, the price of everything else goes up with it.

So I ask....Does raising interest rates fix a geopolitical conflict in the Middle East that's driving up energy costs? That was rhetorical....Of course not.

📉 What This Means for Your Wallet

Instead of fixing the energy crisis, the Fed is just piling another heavy expense onto everyday Americans who are already getting squeezed at the pump. Because of this rate hike, you can expect:

Higher Auto Loans: Need a new truck for work? Be prepared for higher monthly payments.
Costly Home Repairs: Borrowing against your home equity to put a new roof on the house just got a lot more expensive.
Stalled Home Buying: Mortgage rates will stay painfully high, keeping homeownership out of reach for many.

How is this solving inflation? How is this providing “price stability” for everyday Americans? Isn’t it making matters worse?

Are we sure energy is the problem?

If I’ve not convinced you yet that energy prices are the problem….Let me use the Federal Reserves own data to prove it:

The Bureau of Labor Statistics prints a monthly CPI report which is used by the FOMC to determine interest rate policy. As part of that report, they also provide what’s called a Core CPI number which strips out energy costs from the overall CPI equation. And guess what? That number is actually LOWER today than where we started the year. In the August report, Core CPI was 2.4% vs 2.5% in January. You can see the numbers for yourself RIGHT HERE

I don't think we have a widespread inflation problem. I think we have an energy shock problem. And I don't think Federal Reserve raising rates can solve that problem.

But this can be a positive for some...

While life is becoming more expensive for borrowers.....It's also becoming more rewarding for savers. If you're debt free and sitting on excess cash reserves, you can take advantage. Rates on low-risk savings vehicles like CD's, treasury bills, fixed annuities and money markets are rising. If you've got idle dollars sitting in cash, now is a good time to review your accounts and determine if there are better ways to allocate some of those dollars. This is where we can help. If you'd like to chat with us about some ways to take advantage of the higher rates, give us a call or send us an email.

(317) 868-7100 or indywealth@lpl.com.

The opinions expressed in this material do not necessarily reflect the views of LPL Financial.