September delivered the most synchronized round of central bank tightening in years — and it's still working its way through the risk-free rates that determine what borrowers actually owe.

The Federal Reserve led off: on September 16, the FOMC voted 12-0 to raise the federal funds target range by 25 basis points to 3.75%–4%, its first hike since 2023 (Federal Reserve). The statement cited elevated inflation, saying "today's policy action will support a timelier return to the Committee's 2 percent goal," while describing activity as expanding at a solid pace despite elevated geopolitical uncertainty. SOFR has moved in step: the New York Fed's latest published fixing has it at 3.88% for September 24, up from 3.85% the week before (New York Fed).

The ECB got there first. On September 10, the Governing Council raised all three key rates by 25 basis points, taking the deposit facility rate to 2.50%, effective September 16 (ECB). The move followed euro-area inflation hitting 3.3% in August, with energy inflation surging to 14.3% amid the ongoing Middle East conflict. The ECB's new staff projections see headline inflation averaging 3.0% for 2026 before easing toward 2.1% by 2028.

The Bank of Japan hiked too — and further than some expected. On September 18, the BOJ raised its policy rate a quarter point to 1.25%, the highest level since 1995, in a split vote with two dissents (Bloomberg; BOJ). The yen dropped on the announcement, a reminder that a hike doesn't always mean currency strength when the rest of the world is tightening just as fast.

The outlier was the Bank of England, which held Bank Rate at 3.75% on September 17 — but only just. The MPC voted 6-3, with three members pushing for an immediate move to 4% (Bank of England). UK inflation had just come in at 3.1% for August, a five-month high driven by energy prices, and the Bank's own forecast sees CPI peaking above 4% in early 2027. With that three-way split and an inflation forecast pointing higher still, markets now treat the Bank's November 5 meeting as the live one for a hike.

Underlying all four decisions is the same story: energy-driven inflation from the Middle East conflict is proving stickier than hoped, and policymakers are no longer willing to look through it. New York Fed President John Williams underscored that on September 25, saying in a speech that "repeated supply shocks cannot be ignored," even while noting the labor market itself isn't a source of inflationary pressure (FXStreet).

For anyone with a floating-rate loan, none of this is retroactive — compounded-in-arrears interest is built from realized daily fixings, not from the policy announcement itself. But with SOFR now sitting at 3.88% and three of the four majors leaning hawkish, the direction of travel for the next few months looks clearer than it has in a while.

To see how a 25-basis-point move actually flows through to your interest due, use the free SOFR/SONIA/€STR loan calculator — no sign-up required. You can also check current and historical rates on our rates page, browse definitions in the glossary, or read our explainer on risk-free reference rates and the global rate divergence between SOFR, SONIA, €STR and TONA.

Sources: Federal Reserve – September 16 FOMC statement, New York Fed – SOFR, ECB – September 10 monetary policy decision, Bank of Japan – Monetary Policy Releases 2026, Bloomberg – BOJ hikes in split vote, Bank of England – September 2026 monetary policy summary, FXStreet – Fed's Williams on persistent supply shocks.