TSX Rallies 1% a Day After the Fed’s Hike to 4%
The S&P/TSX Composite was up 1.08% at 35,875.94 by mid-afternoon Thursday, a day after the US Federal Reserve raised its policy rate by a quarter point, with the S&P 500 up 1.15% at 7,638.87 and the NASDAQ Composite up 1.61% at 26,397.66. Data as of September 17, 2026, 2:30pm ET.
The decision landed on Wednesday at 2:00pm ET. The rate move itself was the smaller half of the news. What came with it was a set of projections that lifted the Fed’s own expected path for the next three years, and that is the part a Canadian investor should read closely.
What the Fed actually did
The Federal Open Market Committee voted 12-0 to “raise the target range for the federal funds rate by 1/4 percentage point to 3-3/4 to 4 percent”, which is a range of 3.75% to 4.00%.
The statement described an economy in good health. “Economic activity is expanding at a solid pace,” it read. “Productivity growth is strong, and capital investment is robust. Job gains have kept pace with the workforce, and the unemployment rate has changed little.” On prices, the committee was blunt: “Inflation remains elevated. Today’s policy action will support a timelier return to the Committee’s 2 percent goal. The Committee will deliver price stability.”
We set this decision up on September 11, when futures pricing put the odds of a hike at 87%. That Fed decision preview has now been settled by the event.
The projections moved further than the rate
The Summary of Economic Projections is where the meeting changed shape. The median participant now sees the fed funds rate at 4.1% at the end of 2026, up from 3.8% in the June round. The midpoint of the range the Fed just set is 3.875%. A 4.1% median therefore points to one more quarter-point move before the year is out.
The 2027 revision is larger. In June, the median path had the rate down at 3.6% by the end of 2027. The September median has it at 4.1%, unchanged from where it sees the end of this year. From there the medians run 3.9% at the end of 2028, 3.6% at the end of 2029 and 3.2% in the longer run.
What sits underneath those numbers is the interesting part. The Fed did not mark the economy down. It marked it up. Median GDP growth went to 2.3% for 2026 from 2.2%, and to 2.4% for 2027 from 2.3%. The median unemployment rate for both 2026 and 2027 fell to 4.1% from 4.3%. Inflation was nudged higher for this year, with headline PCE at 3.7% against 3.6% in June and core PCE at 3.4% against 3.3%, before falling to 2.3% and 2.5% respectively in 2027.
Put plainly, the Fed raised rates into an economy whose growth and labour forecasts it had just improved, and it expects to hold near 4% for longer than it did three months ago. One caution: the dots are individual participants’ projections of appropriate policy, published in SEP Table 1. They are not a commitment, and they have been revised by half a point in a single quarter before, as this round shows.
What moved today
We cannot tell you why the market did what it did on Thursday, and we are not going to guess. Here is what moved, as of 2:30pm ET.
The TSX at 35,875.94 was up from a prior close of 35,491.30. US large-cap technology led the American indices. AMD rose 6.38% to $545.20 USD, the largest single move among the large-cap names in our data, and we have no company news on file to explain it. NVIDIA added 2.65% to $219.57 USD. Tesla was up 2.43%, Amazon 2.15%, Apple and Microsoft 1.03% each, Alphabet 0.86% and Meta 0.69%.
Away from equities, gold futures were up 0.30% at $4,400.80 USD and WTI crude was down 0.58% at $101.84 USD. The Canadian dollar was off 0.45% at $0.71496 USD.
Canada’s inflation problem is not America’s
The Bank of Canada meets next on October 28, alongside a Monetary Policy Report. It arrives at that date with a genuinely awkward set of numbers.
August CPI, released Monday, held at 3.0% year over year, the same as July. Excluding gasoline, the index rose 2.4%, up from 2.2% in July. The gap between those two figures is 0.6 percentage points, and gasoline was up 22.8% from a year earlier, down from 25.7% in July. Statistics Canada noted that gasoline prices remained elevated as the conflict in the Middle East continued through August. Month over month, prices fell 0.1% unadjusted and rose 0.2% seasonally adjusted. Travel tours were up 26.1% on a base-year effect, while shelter rose just 1.5%.
The Bank’s own preferred measures tell a different story. CPI-trim was 1.9% in August and CPI-median was 2.0%, both unchanged from July. One sits below the 2% target and the other is on it.
That is the tension in one chart. Headline inflation is a full point above the core measures the Bank built specifically to strip out this kind of noise. We do not know which of the two the Bank will weigh more heavily on October 28, and anyone telling you they do is guessing. The full August CPI release is worth reading, and our CPI curtain-raiser from September 12 laid out what was at stake going in.
Producer prices pulled the other way this morning
At 8:30am ET, Statistics Canada published August producer price data that looked nothing like the consumer numbers. The Industrial Product Price Index rose 1.3% in the month and 13.5% from a year earlier, its 23rd consecutive month of year-over-year increase. Stripping out energy and petroleum products still left a 0.8% monthly gain. The Raw Materials Price Index rose 3.1% in the month and 22.8% on the year.
The detail is metals and fuel. Diesel rose 9.6% in the month and 75.0% over the year. Unwrought gold, silver and platinum group metals rose 8.0% in the month and 46.3% over the year, the largest single contributor to the annual increase. Plastic resins were up 10.7% in the month, and copper was 49.3% higher than a year ago.
Those are factory-gate prices, not consumer prices, and there is no fixed timetable by which one becomes the other. But a 46.3% annual rise in precious metals prices is also a revenue line for a large slice of the index most Canadian portfolios are built on, which is worth holding in mind alongside spot gold at $4,400.80 USD. If those prices hold, it lands first in the results of Canadian gold stocks rather than at the checkout.
One more Canadian data point worth noting
Statistics Canada also published July international securities transactions on Thursday. Canadian investors sold an unprecedented $31.0 billion of US shares in July, mainly large-cap US technology, after investing $78.1 billion in US shares over the first half of 2026. That is a month-old figure describing positioning before this week, not a read on today, but it is a reminder that a rally led by US mega-cap tech is not evenly owned north of the border.
What this means before October 28
Three things are now on the table for a Canadian investor. The Fed is at 3.75% to 4.00% and its own median projection implies one further move this year and no relief through 2027. Canadian headline inflation is at 3.0% while the Bank of Canada’s preferred core measures sit at 1.9% and 2.0%. And upstream producer prices are rising at double-digit annual rates while consumer core inflation is not.
None of that resolves into a prediction, and we are not offering one. It resolves into a date. October 28, with the Monetary Policy Report attached, is when the Bank has to weigh those numbers in public.
Data as of September 17, 2026, 2:30pm ET. Index, equity, commodity and currency figures are intraday and will change before the close.
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