Nobody Voted to Wait. The Fed Raised Rates 12 to 0.

In August I wrote that the Fed had held rates in July with three members voting to raise and none voting to cut, and that anyone parking a project "until rates come down" was waiting on a cut nobody on the committee had sponsored. On September 16 the committee met again and raised its benchmark rate a quarter point, to a range of 3.75 to 4 percent. The vote was 12 to 0.

The statement is short and worth reading in the Fed's own words. The economy is "expanding at a solid pace." Inflation "remains elevated." And the reason for the move, as they put it: "Today's policy action will support a timelier return to the Committee's 2 percent goal." In July the hawks were a minority of three. In September they were everyone. If you read my August piece on the rate hold, this is the follow-up, and the news is not what most owners were hoping for.

What changed on your bank's rate sheet the next morning

Most business owners never see the federal funds rate. What they see is prime, the base rate that bank credit lines, business credit cards and a lot of variable-rate loans are priced from, usually as "prime plus" some margin. The Fed publishes prime every week in a table called the H.15, and the edition released September 21 shows it plainly: 6.75 percent on Monday, Tuesday and Wednesday of the meeting week, 7.00 percent on Thursday, September 17, the day after the vote.

That means every "prime plus" balance a business carried on Wednesday cost a quarter point more on Thursday, with no letter and no new agreement. Longer-term borrowing moved too. The 10-year Treasury yield, which fixed-rate loans tend to track, sat at 5 percent or a hair either side of it all that week. If your plan assumed cheaper money by fall, the fall numbers are in.

The Fed wrote down where it thinks rates go from here

Four times a year, each member of the committee writes down where they expect the rate to be at the end of each of the next few years. The Fed publishes the median. In the September edition, the median for the end of 2026 is 4.1 percent, and the median for the end of 2027 is also 4.1 percent. For 2028 it is 3.9. Back in June, the same exercise had produced 3.8 for this year and 3.6 for next.

Read that against today's range of 3.75 to 4 percent and it says two things. First, the typical committee member expects one more quarter-point increase before the year is out. Second, they expect no cut in 2027. These are projections, not promises, and the Fed says so itself. But a plan built on "rates will be lower next year" is now a plan that disagrees with the written expectation of the people who set them.

Why they moved: the prices in your cost of goods

The Fed raised rates because of inflation, so it helps to look at the inflation they were looking at. The Bureau of Labor Statistics' August consumer price report, released September 11, put prices 3.4 percent above a year earlier, with a 0.4 percent jump in August alone. Gasoline did a lot of that work, rising 3.9 percent in the month and accounting, in the report's words, for "over one third of the monthly all items increase." Energy overall was up 16.3 percent from a year earlier. Strip out food and energy and the underlying rate was 2.4 percent, which is closer to the Fed's target but still above it.

The number I would put in front of an owner, though, comes from the other price report. The producer price index for final demand, which tracks what producers charge for the goods and services they sell, was up 5.4 percent over the twelve months ended in August, according to the BLS report released September 10. Prices for goods alone rose 1.1 percent in that one month. Put the two reports together and the things a business buys are getting more expensive faster than the things a consumer buys. That matters for the waiting question, and I'll come back to it.

Banks say one thing. The loan tables show another.

Here is where the picture gets uncomfortable for a small company sitting on its hands. Ask banks what they are doing and the answer is calm. In the Fed's latest survey of senior loan officers, released August 3, banks said they had left their standards for business loans "basically unchanged" for firms of all sizes and were charging narrower rate margins. Demand for business loans was stronger from large and mid-sized companies and "basically unchanged" from small firms. The Fed's own staff, in the minutes of the July meeting, described financing conditions as "generally accommodative for larger businesses" but "somewhat restrictive for many small businesses."

Now look at what the banks actually booked. The Fed's weekly tally of bank balance sheets, the H.8, released September 18, shows commercial and industrial loans at all U.S. commercial banks at $2,945 billion in August, up from $2,682 billion in August of last year. The Fed's growth table has that lending expanding at a 12.2 percent annual rate in the first quarter and 14.8 percent in the second. The Fed's Beige Book, its survey of business conditions across its twelve districts, published September 2 from information gathered through late August, said the same thing in words: loan volumes "remained solid or increased across most Districts."

Split the H.8 by bank size and the split by borrower size shows through. Business loans at the large domestically chartered banks went from $1,451 billion to $1,583 billion over the year, about 9 percent by my arithmetic. At the small banks, where most small companies do their borrowing, the same line went from $699 billion to $737 billion, about 5.5 percent. Money is moving, at a rate that has not been cheap, and it is moving fastest at the big end of the market. The small end reports flat demand and the Fed calls its conditions restrictive. Some of that is banks. Some of it, I suspect, is owners who decided to wait.

The decision a 7 percent prime forces

I said in August that I would not predict the Fed's next move, and I still won't. But the Fed has now made a move, and published its expectation of the next one, so the decision on your desk is more concrete than it was. Here is how I would work it.

• Reprice the parked project at today's rate, then at one more quarter point. The Fed's median path says one more increase this year and a flat 2027. Run the payback on the machine, the inventory buy or the hire at 7 percent prime plus your margin, and again a quarter point higher. If it still pays, the wait has no sponsor left. Our guide on how business funding costs work shows how to put a total dollar cost on any offer.
• If it only works at a lower rate, write down the rate and the date. Then hold that against the Fed's table. A project that needs a 2027 cut to pencil out is now a bet against the written expectation of the committee. That is a legitimate bet to make. It is not the same thing as patience.
• Count the price of waiting on the cost side, not just the rate side. With producer prices up 5.4 percent over the year and goods prices up 1.1 percent in August alone, the equipment or stock you are waiting to buy is not standing still. A quarter point saved on the financing can be spent several times over on the purchase.
• Match the structure to the shape of the need. A need with a fixed size and an end date points to a working capital loan. A need that comes and goes with the season points to a business line of credit you draw on only when it is there. If the cash is tied up in slow-paying customers rather than missing altogether, invoice factoring turns the receivable into cash without adding a loan. Our side-by-side on bank loans and alternative funding lays out where each route earns its place.

Priced at today's rates, with Monera Capital

At Monera Capital, the bar is generally 12 months in business and at least $10,000 in revenue every month, and we fund businesses from trucking companies to staffing agencies. A decision typically takes 4 – 8 hours, the check that starts it is a soft credit pull that does not affect your score, and you see the full cost of any offer before you commit to it. The Fed has told you what it expects to do next. If the project on your desk pays at today's cost of money, the rest of the decision is yours. See what you qualify for.

Data in this article comes from the Federal Open Market Committee's statement and Summary of Economic Projections of September 16, 2026, and its minutes of the July 28 – 29, 2026 meeting, from the Federal Reserve's H.15 Selected Interest Rates release of September 21, 2026, its H.8 Assets and Liabilities of Commercial Banks release of September 18, 2026, its Senior Loan Officer Opinion Survey of July 2026 (released August 3, 2026) and its Beige Book published September 2, 2026, and from the U.S. Bureau of Labor Statistics' Consumer Price Index and Producer Price Index reports for August 2026, released September 11 and September 10, 2026. Figures are the latest available as of publication and are subject to revision by their sources.