A year ago, headlines about central banks all sounded the same: "another rate cut". September 2026 reversed that direction. The world's most important central banks decided that inflation – driven by expensive energy – is not falling fast enough and has to be stopped with more expensive money.

The Fed: first hike in three years

On 16 September the US Federal Reserve raised the target range for the federal funds rate by 0.25 percentage points, to 3.75–4.00%. The decision was unanimous, 12 votes to 0. It is the first rate hike in the US since 2023.

The Fed's statement was short: "Inflation remains elevated. Today's policy action will support a timelier return to the Committee's 2 percent goal." The minutes of the meeting, published later, show that:

• PCE inflation (the Fed's preferred measure) was 3.8% year on year in August, with core PCE at 3.4%,
• the unemployment rate fell to 4.1%, meaning the labour market is close to full employment,
• inflation is driven mainly by earlier tariff increases, more expensive energy (including disruption to oil shipments from the Middle East) and pricier electronics, for which demand is rising with the build-out of artificial intelligence infrastructure,
• most committee members judged that another rate increase would likely be appropriate by the end of the year, although decisions will depend on incoming data.

The bond market reacted clearly. The yield on 10-year US Treasury bonds was around 5.2% on 13 October. That means mortgages, business loans and government debt are all getting more expensive in the US.

The ECB: second hike this year

The European Central Bank raised rates on 10 September, also by 0.25 percentage points. Since 16 September the rates are:

• deposit facility rate: 2.50% (the one most often quoted as the ECB's main rate),
• main refinancing operations rate: 2.65%,
• marginal lending facility rate: 2.90%.

This is the second hike of 2026 – the first came on 11 June, and the ECB paused in July. The next decision is due on 29 October. ECB economists expect euro area inflation to average 3.0% this year, 2.5% in 2027 and 2.1% in 2028. Economic growth in the euro area is expected to be only 0.9% in 2026. It is a difficult combination: the economy is growing slowly while prices rise quickly – and the central bank has to choose what worries it more.

Europe is also more sensitive to expensive energy than the US, because it imports most of its oil and gas. When energy prices jumped again in October, inflation fears returned to European bond markets.

What about smaller currencies like the Polish złoty?

Poland's Monetary Policy Council kept rates unchanged in October – the NBP reference rate is 3.75%. But what the Fed and the ECB do affects countries like Poland in several ways:

1. The exchange rate. When rates rise abroad but stay put at home, holding the local currency becomes relatively less attractive for investors. Economists surveyed by Parkiet list a weaker złoty as one of the arguments for rate hikes in Poland. According to NBP average rates on 15 October, one euro cost PLN 4.3691, one US dollar PLN 3.8952, the Swiss franc PLN 4.6949 and the pound PLN 5.1647. The euro itself traded at about $1.12 in mid-October.

2. Loans in euro. If you have a loan in euros (or income in one currency and debt in another), your repayment depends on EURIBOR, which rises together with ECB rates. Two hikes this year mean half a percentage point more in total.

3. Investments. Higher rates usually mean lower prices for bonds that have already been issued (because new ones pay more). Foreign bond funds may therefore lose value for a while. Shares are holding up well for now – the US S&P 500 was close to record highs in mid-October, and analysts expect strong third-quarter earnings growth. History shows, however, that periods of rate hikes can make stock markets nervous.

4. Travel and shopping abroad. With the euro at PLN 4.37, a week's holiday priced at €1,500 costs about PLN 6,550. Every 10 groszy of difference in the exchange rate means PLN 150 one way or the other.

Why raise rates when the problem is oil?

It is a good question, and economists argue about it themselves. A rate hike will not get more tankers through the Strait of Hormuz. But a central bank is not fighting the price of oil itself – it is fighting the risk that expensive energy "spills over" into all other prices and into people's expectations.

The mechanism is simple: if companies and workers believe inflation will stay high for a long time, they start raising prices and asking for pay rises in advance – and inflation becomes self-sustaining. More expensive credit cools demand and shows that the central bank takes inflation seriously. The price is slower economic growth.

What this means for you

• Do not assume rates will only go down. When planning a loan, calculate the repayment at a rate 1–2 percentage points higher than today.
• Have a loan in a foreign currency or in euros? Check when EURIBOR resets in your contract and add a buffer to your budget.
• Planning spending in a foreign currency? A trip, equipment, tuition – you can buy the currency gradually, in several instalments, instead of guessing the best moment.
• Saving? Higher rates are also good news: deposits and bonds pay more. Always compare interest with inflation, though.
• Investing for the long term? Do not react to individual central bank decisions. Regular investing according to a plan usually beats trying to predict the market.

In short

• Fed: rates at 3.75–4.00%, the first hike since 2023, another one by the end of the year likely.
• ECB: deposit rate 2.50%, the second hike of 2026, next decision on 29 October.
• Why: inflation driven by expensive energy, tariffs and pricier electronics.
• Smaller economies: even with unchanged local rates, borrowers in euros and travellers feel weaker currencies and rising EURIBOR.

Information and educational material, not investment advice. Exchange rates from the NBP table of average rates of 15 October 2026.

Sources: Federal Reserve – statement of 16 Sept 2026, Federal Reserve – FOMC minutes 15–16 Sept 2026, ECB – monetary policy statements 2026, Admiral Markets – ECB calendar and rates, Crypto Briefing – ECB projections, Euronews – markets on 14 Oct 2026, NBP – average exchange rates, Parkiet – RPP decision. Photos: Unsplash.