Central banks all raised or held, and markets shrugged

The Fed, ECB and Bank of England all moved this week, yet equities and gilts barely reacted. That gap between policy and price is the story, not the decisions themselves.

Abhineet RaiFounder · Wealth Adviser Week ending Friday 18 September 2026 About a five-minute read

The week in figures

Each figure as at its own date · sources below

Bank Rate 3.75% Unchanged17 Sept ECB refinancing rate 2.65% +25 bps18 Sept Fed funds target 3.75–4.00% +25 bps17 Sept UK 10-year gilt 5.24% −6 bps16 Sept US 10-year Treasury 5.01% +5 bps18 Sept US 2-year Treasury 4.76% +13 bps18 Sept GBP / USD 1.3344 −1.2%18 Sept GBP / EUR 1.1644 −0.1%18 Sept Brent crude $130.80 +10.8%15 Sept

UK CPI inflation 3.1% +0.2 pp31 Aug

The market has already priced what the central banks just confirmed

Three central banks acted this week and none of it was a surprise. The Fed raised its target range a quarter point to 3.75–4.00%, its first increase since 2023, unanimously, with a statement that flagged at least one more rise this year.1 The ECB lifted its refinancing rate a quarter point to 2.65%. The Bank of England held at 3.75%, but by a split vote, with three of nine members wanting a hike now rather than later.2 Every one of these had been flagged for weeks. The market's job this week was not to absorb news, it was to confirm a story it had already told itself.

That is why the equity reaction matters more than the rate decisions themselves. US stocks fell on the Fed's Wednesday statement and then largely recovered it on Thursday, with the S&P 500 closing the week roughly flat and the Nasdaq the only major US index to post a weekly gain.3 That is not a market digesting a hawkish surprise. It is a market that had already positioned for a hike and needed only the confirmation, after which the older and more durable story, corporate earnings carried by artificial intelligence spending, simply reasserted itself.4 The FTSE 100 told a similar tale in miniature: banks and telecoms fell hard on Friday, yet the index still closed the week higher.5

The place where policy and price genuinely disagreed was the gilt market, and it is instructive that it was not about the rate decision at all. The Bank paused sales of long gilts entirely and stretched its bond disposal programme out to 2034, a slower unwind than the market had feared.6 UK ten-year yields fell six basis points on the week even as the Bank held rates and inflation running at 3.1% gave it every reason to sound hawkish. That is the pattern worth sitting with. Where a decision was already expected, the market moved on to the next thing. Where the mechanics of bond supply changed unexpectedly, yields moved. Rate decisions no longer surprise anyone; the plumbing still can.

Abhineet RaiFounder · Wealth Adviser, Rai Wealth Management

Equities

US · UK · India

US equities ended a volatile week close to unchanged: the S&P 500 rose 0.17% on Friday to 7,650.50 and the Nasdaq Composite gained 0.39% to 26,522.55, while the Dow posted its third consecutive losing week, its worst run since March.7
The rotation was clear rather than subtle. Thursday's rally was led by technology and consumer discretionary shares, with financials lagging, and that pattern of large-cap technology outperforming rate-sensitive and smaller companies held into Friday's close.4
The FTSE 100 closed the week at 10,659.13, down 1.4% on Friday alone as banking and telecom stocks fell, but still ahead for the week as a whole.5
Indian equities extended a longer losing run, with the Nifty 50 down 0.22% and the Sensex down 0.65% on the week, weighed by foreign selling and elevated crude prices.8

Rates & Fixed Income

UK · US

The Bank of England held Bank Rate at 3.75% by a 6–3 vote, with the three dissenters preferring an immediate quarter-point rise given inflation at 3.1%.2
Alongside the decision, the Bank paused all gilt sales until April and halted sales of long-dated gilts entirely, setting out a programme to run down its remaining £488 billion of holdings by 2034, roughly £20 billion a year, slower than the pace of the past twelve months.6
UK ten-year gilt yields fell to 5.24%, six basis points lower on the week, a move that sits with the supply announcement rather than with the rate hold.
The Fed raised its target range to 3.75–4.00%, its first hike since 2023, and US ten-year Treasury yields rose five basis points to 5.01% while two-year yields rose thirteen basis points to 4.76%, a steeper move at the short end that reflects the prospect of further increases this year.1

Commodities

Oil & gas

Oil moved more than anything else this week. WTI crude rose 5.7% to $107.02 a barrel and Brent rose to $130.80, up 10.8% on the week, both driven by concern over supply disruption tied to the Middle East conflict.9
Henry Hub natural gas rose 9.6% to $2.97 per million BTU over the same stretch, a smaller number but a comparable percentage move.10
Gold slipped 0.9% on the week to $4,348.15 an ounce, a modest pullback against a backdrop of rising real yields rather than any change in the reasons people have held it this year.11

Currencies

GBP

Sterling fell against the dollar this week, with GBP/USD down 1.2% to 1.3344, as the Fed's hike and the prospect of further US tightening outweighed the Bank of England's own more hawkish tone.
GBP/EUR was little changed, down 0.1% to 1.1644, since the ECB moved in the same direction as the Bank of England this week.

What I'm Watching

The week ahead

The Bank of England publishes minutes of its next meeting on 5 November, which will show how the three dissenters' case develops as August's 3.1% inflation reading feeds into the autumn data.2
US Treasury yields, at 5.01% on the ten-year and 4.76% on the two-year, will be sensitive to any further signal from Fed officials on the pace of hikes flagged in this month's statement.1
Oil prices, having risen sharply this week on Middle East supply concerns, will show whether the move was a lasting repricing or a spike that unwinds as quickly as it arrived.9
Indian equities enter the coming week on a losing streak driven by foreign outflows, and whether that selling continues will say more about global positioning than about India itself.8

Sources

Market Snapshot figures from Bank of England, ECB Data Portal, New York Fed, US Treasury, EIA and ONS. Contains public sector information licensed under the Open Government Licence v3.0.

Abhineet Rai

Founder · Wealth Adviser, Rai Wealth Management

Abhineet founded Rai Wealth Management after more than two decades in banking, including spells as a Director in Private Banking at Credit Suisse, Bank of Singapore and HSBC Private Bank in London. He trained at the National Defence Academy in India before taking an MBA, and holds certifications in Investment Planning, Securities & Derivatives, and Regulated Mortgage advice.

20+ years in banking
Credit Suisse · Bank of Singapore · HSBC
NDA-trained, then MBA

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