Will jobs report prompt Fed rate hike?
Sept. 14, 2026
By Mary Hightower
University of Arkansas Division of Agriculture
Fast Facts
- Federal Open Market Committee to meet Sept. 15-16
- Loy: “Farmers are going to be the ones who are most exposed”
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FAYETTEVILLE, Ark. — In the wake of August’s burgeoning jobs report and the upward revisions of the June and July jobs reports, analysts are closely watching if the Federal Reserve will raise interest rates at its Sept. 15-16 meeting.
Ryan Loy, assistant professor and extension economist for the University of Arkansas Division of Agriculture, said August’s 162,000-job gain was well above the prior 12-month average of about 31,000 jobs per month, while June and July payroll figures were revised upward.
“That certainly seems like a positive trend,” he said. “It could support a decision to hike rates.”
Typically, an expansion in the jobs report reflects an economy that’s heating up, and the Federal Open Market Committee might vote to increase interest rates to cool growth, so “the economy doesn't outpace wages,” Loy said.
“However, the Federal Open Market Committee doesn’t want to make that kind of decision off of a single data point when they don't have the full context,” he said.
A significant factor weighing on members of the Federal Open Market Committee is the Consumer Price Index, which rose 0.4 percent month over month. The core Consumer Price Index, which excludes food and energy costs, rose 0.3 percent, exceeding expectations. The annual inflation rate was pegged at 3.4 percent, while core inflation rose 2.4 percent over the year.
“Overall, the annual inflation measure is lower, but the month-over-month change is higher,” Loy said, adding that the month-to-month rises are likely due to turbulence from conflict affecting shipping around the Strait of Hormuz and the Red Sea/Bab el-Mandeb corridor, including reports of Houthi forces capturing a Yemeni port and an island.
Who benefits from a higher rate
Higher interest rates aren’t all bad.
“If you have a high-yield savings account or are invested in CDs, bonds or money market funds, you’re going to earn more interest,” Loy said. “At the same time, when those interest rates increase, that means our dollars are more expensive to borrow.
“That’s what we call a strong dollar, which is something that's been working against us on the export market for a couple of years. However, a higher-rate dollar can lower the cost of imports,” he said.
Whichever way the Fed leans, “farmers are going to be the ones who are most exposed,” he said. Farmers with short-term notes will likely be hurt the most by a rate hike. However, those with longer-term notes such as land loans will feel the effects of a hike less.
To learn about extension programs in Arkansas, contact your local Cooperative Extension Service agent or visit uaex.uada.edu. Follow us on Facebook and Instagram. To learn more about the Division of Agriculture, visit uada.edu. To learn more about ag and food research in Arkansas, visit the Arkansas Agricultural Experiment Station at aaes.uada.edu.
About the Division of Agriculture
The University of Arkansas Division of Agriculture’s mission is to strengthen agriculture, communities, and families by connecting trusted research to the adoption of best practices. Through the Agricultural Experiment Station and the Cooperative Extension Service, the Division of Agriculture conducts research and extension work within the nation’s historic land-grant education system.
The Division of Agriculture is one of 22 entities within the University of Arkansas System. It has offices in all 75 counties in Arkansas and faculty on three campuses.
Pursuant to 7 CFR § 15.3, the University of Arkansas Division of Agriculture offers all its Extension and Research programs and services (including employment) without regard to race, color, sex, national origin, religion, age, disability, marital or veteran status, genetic information, sexual preference, pregnancy or any other legally protected status, and is an equal opportunity institution.
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Media Contact:
Nick Kordsmeier
nkordsme@uada.edu