Blue Vault
The Federal Open Market Committee voted unanimously to raise the federal funds target range by 25 basis points to 3.75%–4.00% on September 16, 2026.
In its statement, the Federal Reserve said economic activity continued to expand at a solid pace while inflation remained elevated. The Committee said the rate increase supports its goal of returning inflation to 2%.
Why It Matters for Advisors
Higher interest rates can affect alternative-investment strategies differently.
Floating-rate investments may generate additional income as rates rise, but higher borrowing costs can also place greater pressure on borrowers, property owners and leveraged investment programs.
Advisors should consider how a fund or offering’s interest-rate exposure could affect:
- Portfolio income
- Borrowing and refinancing costs
- Debt-service capacity
- Distribution coverage
- Borrower credit quality
- Property values and transaction activity
The effect of a rate increase depends on the investment’s structure, underlying assets, use of leverage and sensitivity to changing financing conditions.
