Fed set to announce rate decision Wednesday amid inflation above 3 percent

U.S. Treasury Secretary Scott Bessent told a congressional hearing on September 15, 2026, that the government’s tripled bond buyback program represents “the two most successful treasury auctions that we’ve had in 20 years,” even as the 10-year Treasury yield climbed to a 19-year high.

The yield rate for the 10-year Treasury reached 5.041% on Tuesday, the highest level since 2007. U.S. Treasury yields, the rate of return that investors receive when a bond matures, underpin the rates of other loans such as mortgages, car payments and credit card debt. Bessent’s testimony came one day before the Federal Reserve’s policy meeting, where the central bank is widely expected to announce its first interest rate hike since July 2023.

When bond yields began rising in August, Treasury announced it would triple its buyback of government debt, going from $2 billion to $6 billion per operation in an effort to bring yields down. Despite the intervention, yields have continued to climb. Bessent defended the program on Tuesday, telling lawmakers the operations were “the two most successful treasury auctions that we’ve had in 20 years.” He added that “since President Trump has come in, (the US bond market) has been the best-performing bond market in the developing world.”

The yield climb reflects investor concern over the war in Iran and its effect on energy prices. Brent crude, the global benchmark for oil prices, hit $108 a barrel last week for the first time since May. Rising energy costs feed into broader inflation pressures, which the Federal Reserve is tasked with containing.

Earlier in August, the U.S. government stepped in to support the Japanese yen, a major foreign holder of U.S. bonds. Bessent told Congress the intervention was a way to signal support for Japanese policies.

U.S. inflation has soared over the summer, reaching a three-year high of 4.2 percent in May before easing to 3.4 percent in July and August. Stubbornly high prices set up a difficult decision for the central bank, with Trump demanding rates be lowered.

The Fed’s rate decision is scheduled for Wednesday. The central bank is widely expected to raise rates rather than cut them, despite the president’s demands.