Monthly economic update — September 2026: the RBA hikes to 4.60%, the Fed hikes for the first time since 2023, and oil keeps the pressure on

In short

In September 2026 the RBA raised the cash rate 25 basis points to 4.60% on 29 September, and the Federal Reserve raised its range to 3.75%–4.00% on 16 September, its first hike since 2023. Energy prices from the Middle East war, rising bond yields and a weaker Australian dollar framed the month.

Two central banks raised rates in September, both citing energy prices and inflation that has not cooled as hoped. The Federal Reserve lifted its target range on 16 September, its first increase since 2023, and the Reserve Bank of Australia lifted the cash rate to 4.60% on 29 September. Bond yields pushed to multi-year highs, the Australian dollar fell, and the Middle East war kept oil elevated. This update covers each of those in turn, in text only, with the sources named so you can check them.

The big picture

The theme of the month was rates staying higher for longer, then going higher still. In the United States the Fed moved from holding to hiking. In Australia the RBA delivered its fourth increase of 2026. Long-term bond yields rose in both countries, with the US 10-year Treasury yield going above 5%, a level not seen since 2007 according to Yardeni Research.

Share markets were mixed. According to Trading Economics, the S&P 500 slipped about 0.4% over September while the Nasdaq 100 rose about 3.2%, led by technology. The ASX 200 closed the month at 8,789 on 30 September, which is roughly 2.8% below the 9,043 level we cited at the end of August. The Australian dollar fell about 3.1% over the month to around US$0.694.

The RBA: a fourth hike to 4.60%

On 29 September 2026 the Reserve Bank's Monetary Policy Board raised the cash rate target by 25 basis points to 4.60%. The decision was unanimous. It follows a hold at 4.35% at the August meeting, and Trading Economics describes 4.60% as the highest cash rate since 2011.

The Board's statement gave several reasons:

Energy prices. The Middle East conflict has broadened, and global energy prices are much higher than the Bank assumed in its August forecasts.
Inflation. Recent inflation has been stronger than expected, with the Board also pointing to AI-related price growth in tech goods.
Capacity pressure. Domestic capacity pressures remain, and growth in the June quarter was stronger than the Bank expected even though activity has slowed.
Housing and labour. Housing prices fell in most capital cities and new housing loans declined noticeably. The labour market has eased broadly as the Bank expected.

The Board added that it "will continue to do what it considers necessary" to return inflation to target, including raising the cash rate further if needed. That is a clear signal that another increase at a future meeting is live, not a one-off.

The data supports the tone. Trading Economics reports that Australian monthly CPI rose 0.4% in August, a touch below the 0.5% economists expected, but the annual rate accelerated to 4.0% from 3.5% in July. On the labour side, unemployment rose to 4.6% in August from 4.5%, the highest since November 2021, even though employment increased by 39,500 and the participation rate rose to 67.1%. So the labour market is loosening at the edges while inflation is moving the wrong way, which is exactly the trade-off that makes the Board's job uncomfortable.

The Federal Reserve: the first hike since 2023

On 16 September 2026 the Federal Open Market Committee raised the federal funds target range by a quarter of a percentage point to 3.75%–4.00%. The vote was 12–0. It is the first increase since 2023, and it follows the 29 July meeting where the Committee held at 3.50%–3.75% with three dissenters (Hammack, Kashkari and Logan) who wanted a hike.

According to Trading Economics, the Fed's updated projections were hawkish:

16 of 18 participants see at least one more quarter-point hike this year, and four see two more.
The median forecast for 2026 has GDP growth at 2.3%, PCE inflation at 3.7%, core PCE at 3.4% and unemployment at 4.1%.
Markets largely expect another hike at the December meeting.

Fed Chair Kevin Warsh set the tone earlier, at Jackson Hole on 28 August, which we covered in our August update. The September decision followed through on it.

The data since then has been mixed, which is part of why the path is debated. Trading Economics reports that August core PCE (the Fed's preferred inflation gauge) rose 0.2% for the month, and headline PCE rose 0.3% against an expected 0.4%. Second-quarter GDP was revised up to 2.2% annualised from 1.5%. Yardeni Research argued on 30 September that core PCE still justifies tightening, "both the recent September rate hike and presumably future ones", provided underlying inflation stays elevated. A separate Yardeni note on 29 September asked whether wage growth is accelerating, one of the things the Fed is watching.

Bond yields: the market's own tightening

The bond market did some of the Fed's work for it. Yardeni Research reported that the US 10-year Treasury yield climbed to 5.17% at the close on Friday 25 September, its highest level since 2007, after touching an intraday high of 5.22%. Trading Economics had it slightly higher by month end, around 5.25%–5.3%. Published sources differ on the precise level and on how it compares with earlier peaks, so treat the exact figure as approximate; the direction is the point.

Yardeni's commentary put the rise down to several forces working together: higher oil and refined fuel prices from the Middle East and Russia–Ukraine wars, rising interest rates in Japan that are pushing hedge funds to unwind yen carry trades by selling higher-yielding US and other government bonds, and what Yardeni called a booming economy. On 28 September it flagged a possible "revenge of the bond vigilantes" as its main worry, while keeping a 70% probability on its bullish base case for the decade.

Australian yields followed. The Australian 10-year yield touched its highest level since mid-2011 during the month before easing back to below 5.4% around the RBA decision, according to Trading Economics.

Oil and the Middle East

The clearest source on oil for this purpose is the US Energy Information Administration (EIA), the statistical arm of the US Department of Energy, whose Short-Term Energy Outlook is published monthly. The September edition (released 9 September, with data finalised on 3 September) reported that:

The global oil price averaged about US$91 a barrel in August, roughly US$7 higher than July.
Global oil inventories have fallen by about 400 million barrels so far this year.
Middle East production is expected to remain below its pre-conflict average until the second quarter of 2027.
EIA's base forecast has Brent around US$90 a barrel in the second half of 2026, easing to about US$74 in 2027.

For live prices, Trading Economics had Brent around US$98 a barrel on 30 September, up more than 8% for the month, and WTI around US$90.50, up more than 5%. The drivers are the war involving Iran, disruption to shipping through the Strait of Hormuz, and a US blockade on Iranian exports. Late in the month, there were reports that Iran had proposed reopening the Strait, which Yardeni reported helped pull the 10-year yield off its intraday high on 25 September; Trading Economics notes US–Iran talks over Hormuz are continuing and that the US has said it has no intention of easing sanctions.

Why this matters beyond the petrol pump: both the RBA and the Fed named energy prices in their decisions. If oil holds near US$100, the path of interest rates is hard to separate from the path of the war.

Markets in September

US shares. The S&P 500 slipped about 0.4% for the month, the Nasdaq 100 gained about 3.2%, and the Dow Jones Industrial Average fell by about 2,280 points, all per Trading Economics. Yardeni noted that the Nasdaq closed at a record high in the week of 21 September, before yields pushed back up.
Australian shares. The ASX 200 closed at 8,789 on 30 September after a 0.9% gain that day.
Australian dollar. About US$0.694 at month end, down about 3.1% over the month and still up about 5% over the year, per Trading Economics. A higher US yield and a stronger US dollar tend to weigh on the Australian dollar, even when the RBA is also hiking.
Gold. Around US$4,157 an ounce at the time of writing, up about 7.6% over the past year per Trading Economics.

What it means for retirees

General information only, and not advice for your situation.

Term deposits and cash. A 4.60% cash rate flows through to savings and term deposit rates over time, which helps retirees who hold cash. It is also the reason deeming rates are worth watching; see our articles on how deeming rates work for the Age Pension and on three ways interest rates affect your retirement.
Variable-rate borrowers. Retirees with a mortgage or investment loan face another increase. The RBA has signalled more could follow.
Shares and super. Super balances hold a mix of shares, bonds and property, so September's pattern of rising yields and a soft Australian share market is a reminder that short-term falls happen. Sequence risk, meaning poor returns early in retirement while drawing an income, matters more than a single month.
Inflation. Age Pension indexation follows price and wage measures, and the 20 September increase already reflects earlier inflation. Annual CPI at 4.0% is a reminder that costs are still rising.

Key risks to watch

Another RBA hike. The statement leaves the door open, and the next CPI data will matter.
A December Fed hike. Markets largely expect one, and 16 of 18 Fed participants projected at least one.
Bond yields. A sustained move higher would pressure both shares and property values.
Oil and Hormuz. A negotiated reopening of the Strait could ease oil; further disruption could push it higher.
The Australian labour market. Unemployment is at 4.6%, a four-year high, while inflation is at 4.0%.

Bottom line

September was the month both central banks chose tighter policy, with energy prices as a shared driver. The RBA is now at 4.60% with an explicit willingness to go higher, the Fed is at 3.75%–4.00% with more hikes projected, yields are at multi-year highs, and oil is tied to a war whose outcome no forecaster can call. Markets have mostly held up, but with less room for error. If you hold investments, this is a good month to check that your asset mix, cash buffer and withdrawal plan still suit you, rather than react to any single headline.

Figures from Trading Economics and Yardeni Research are third-party market data, are rounded, and may differ from other vendors; we have named the source next to each figure so you can check the current number yourself.

Sources

Key takeaways

The RBA lifted the cash rate 25 basis points to 4.60% on 29 September, a unanimous decision, and said it will raise it further if needed.
The Fed raised its target range to 3.75%–4.00% on 16 September, its first increase since 2023, with 16 of 18 officials projecting at least one more hike this year.
The US 10-year Treasury yield rose above 5%, its highest since 2007 according to Yardeni Research, while Australian CPI accelerated to 4.0% in August.
The EIA put August's global oil price average at about US$91 a barrel, and Trading Economics had Brent near US$98 on 30 September, up over 8% for the month.
The ASX 200 closed September at 8,789 and the Australian dollar fell about 3.1% to around US$0.694.

Frequently asked questions

What did the RBA do in September 2026?

The Monetary Policy Board raised the cash rate target by 25 basis points to 4.60% on 29 September 2026. It cited higher energy prices, stronger-than-expected inflation and domestic capacity pressures, and said it would raise rates further if needed.

Did the US Federal Reserve raise rates in September 2026?

Yes. On 16 September the FOMC voted 12–0 to raise the target range by a quarter point to 3.75%–4.00%, its first increase since 2023. Most officials projected at least one more hike this year.

Where can I find reliable oil price data for the Middle East conflict?

The US Energy Information Administration's monthly Short-Term Energy Outlook is a primary source for global oil price and supply forecasts. Trading Economics shows live Brent and WTI prices. Both are third-party to the RBA and Fed, so check the date of each figure.

Why did bond yields rise in September 2026?

Yardeni Research pointed to higher oil and fuel prices from the Middle East and Russia–Ukraine wars, rising Japanese interest rates that prompted unwinding of yen carry trades, and a strong US economy. Sources differ on exact yield levels, so treat figures as approximate.

A note on advice. This article is general information only and doesn't account for your personal circumstances. Everyone's situation is different — before acting, it's worth talking it through with a licensed adviser who knows your full picture.