A unanimous hike, and a signal of more
The Federal Reserve raised its benchmark interest rate by a quarter point on September 16, lifting the target range to 3.75% to 4%. The vote was 12-0, the first increase in more than three years and the first policy move under Chair Kevin Warsh, and it reverses a cut made last December. The median projection in the September dot plot shows one more quarter-point hike this year. This summer's inflation readings do not tell me that underlying trends have meaningfully improved, Warsh told reporters.
Oil is doing the damage
Energy prices are the main driver. Brent settled at $107.63 a barrel on September 10, up 6.3% in a single day, and West Texas Intermediate settled at $102.48. Diesel reached a record $5.94 a gallon, which feeds straight into the cost of moving goods by road, rail and air. Goldman Sachs has warned prices could pass $120 if attacks on shipping in the Persian Gulf and the Red Sea continue, and the Energy Information Administration lifted its forecast for Brent in the second half of 2026 to about $90.
Trucks, warehouses and the cost of a pallet
Higher diesel shows up first in freight rates, then in the cost of every cargo container and every pallet that moves. Third-party logistics operators say customers are already asking to renegotiate annual contracts, and warehouse and distribution centre managers report that fuel surcharges are climbing faster than storage rates. Retailers are holding less stock and ordering later, which pushes more volume through sorting lines in shorter windows.
What comes next
Options pricing now puts a 25% probability on Brent staying above $100 into March 2027, up from 6% a month earlier. If that happens, the Fed's next meeting gets harder, because energy costs lift headline inflation while squeezing household demand. For supply chain managers, the practical advice from freight brokers is to lock in capacity early and price fuel separately from linehaul.
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