The Fed's first rate hike since 2023 rocked markets Wednesday. Here's what it means for your wallet on Friday, September 18.
Friday, September 18, 2026 | moneysavings.ca
1The Fed Hiked — First Time Since 2023
The U.S. Federal Reserve raised its benchmark interest rate by 25 basis points to a target range of 3.75%–4.00% on Wednesday — the first hike since June 2023. Chair Kevin Warsh cited persistent inflation tied to elevated oil prices and a still-resilient economy, saying recent inflation readings hadn't improved enough to justify holding. The decision was unanimous. The updated dot plot signals one more potential hike by year-end, then a pause through 2027. Markets initially sold off, but U.S. futures are rebounding this morning as investors reframe the move as a sign the Fed is serious about getting inflation under control.
💡 What It Means for YouA higher U.S. federal funds rate puts upward pressure on Canadian bond yields and mortgage rates. The BoC is already in hawkish territory — economists at National Bank and Scotiabank are forecasting a Canadian hike to 2.50% on October 28. If both central banks are tightening, expect variable-rate mortgages and lines of credit to get more expensive heading into fall.
2BoE Held — But Warned of a Hike If Oil Keeps Climbing
The Bank of England held its base rate at 3.75% on Thursday in a 6–3 split vote, with three members pushing for an immediate hike to 4.00%. Governor Andrew Bailey held the line for now but made it clear: if the energy shock from the Middle East conflict deepens, a rate increase is coming. The BoE flagged that UK inflation has hit a five-month high of 3.1%, driven by oil prices — and that the effects so far have been "limited," but that won't last if crude stays above $100.
💡 What It Means for YouCanada and the UK aren't the same market, but a divided BoE holding while the Fed hikes is a signal that major central banks are diverging. For Canadians with international investments or travel plans, a stronger U.S. dollar (and weaker pound and loonie) will affect your purchasing power abroad. The loonie is trading around 71.12 US cents today — near recent lows.
3The TSX Is Bouncing Back — and Dollarama Crushed It
The TSX closed Wednesday at 35,491.27 — its lowest level since July 31 — after the Fed announcement weighed on commodity and bank stocks. But Thursday morning is looking different: TSX 60 futures are up roughly 1% as investors broadly reinterpreted the Fed hike as a credibility signal, not a growth threat. One bright spot in Wednesday's selloff: Dollarama surged 5.5% after reporting strong quarterly earnings and improved sales guidance. With Canadian households pinching pennies under the weight of tariffs and higher rates, dollar stores are having a moment.
💡 What It Means for YouA rebound in TSX futures is encouraging for TFSA and RRSP investors who've watched the index slide from its late-August record near 37,069. But don't mistake a futures bounce for a sustained recovery — oil above $100, global rate hikes, and tariff uncertainty are still very much in play. Stay diversified and resist the urge to make big moves based on a single morning's momentum.
4The Bank of Japan Meets Today — and a Hike to 1.25% Is Expected
All eyes shift to Tokyo today as the Bank of Japan wraps its two-day meeting (Sept. 17–18). Markets are widely pricing in a 25-basis-point hike to 1.25% — which would be the highest Japanese policy rate in roughly three decades. The BoJ has been on a slow normalization path, and with oil-driven inflation and a weak yen adding pressure, policymakers are expected to move. A BoJ hike would strengthen the yen, potentially pulling some global capital out of North American markets as Japanese investors repatriate funds.
💡 What It Means for YouJapan's rate decisions may feel remote, but they have real ripple effects. A stronger yen tends to put pressure on global equities, including the TSX. If you hold international equity ETFs or funds with Japan exposure, watch this one. It also adds to the broader picture: the world's major central banks are all moving in the same direction — tighter.
5Oil Is Still Above $100 — and the Gas Tax Holiday Isn't Saving You Enough
Brent crude is holding above $100/bbl for the third straight session, anchored by Saudi Arabia's shutdown of its East-West "Petroline" pipeline (a key Hormuz bypass) following drone strikes near Medina, and ongoing U.S.-Iran hostilities in the Strait of Hormuz. WTI is hovering near $102–103. The CAA national average gas price stood at 178.2¢/L as of Tuesday — up from 170.5¢/L in early August — even with the federal gas tax holiday extended to January 31, 2027. Goldman Sachs has flagged $120/bbl oil as a realistic risk scenario if the conflict widens.
💡 What It Means for YouThe gas tax holiday is cushioning the blow, but not eliminating it. If you're commuting or road-tripping this fall, budget for pump prices that could stay elevated for weeks. More importantly, sustained oil above $100 feeds directly into Canada's inflation reading — the BoC's next CPI data point comes October, and if it's hot, an October rate hike becomes even more likely. Heating season is also around the corner: lock in a fixed-rate natural gas plan if your provider offers one.
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