The Fed Just Raised Rates, and the Safe Half of Your 401(k) Isn't

On September 16, 2026, the Federal Reserve raised its target range by a quarter point, to 3.75% to 4.00%. It was the first increase since July 2023. That afternoon the 10-year Treasury closed at 5.01%, higher than on any day in 2022 and the highest since the summer of 2007. By September 25 it had reached 5.17%.

Most of the coverage went to mortgages and credit cards. The bigger effect sits inside your 401(k), because both halves of it, the stocks and the bonds, are priced against interest rates. We have a recent record of what that looks like, and it points to one asset the account usually leaves out.

Why the Fed raised rates

“The plain fact is that inflation is too high and has been for too long,” Fed Chair Kevin Warsh said at the press conference. Consumer prices rose 3.4% over the 12 months to August. A basket of groceries and bills that cost $100 in January 2021 cost about $128 this August, which means a dollar buys about 22% less than it did at the start of 2021.

Raising rates is how the Fed slows that down. The average 30-year mortgage rate was 6.95% the week of the decision, according to Freddie Mac, and 7.03% a week later. The Fed’s own median projection puts the rate at 4.1% by the end of 2026, one step above where it sits now. Warsh declined to commit either way: “I’m not going to pre-judge any future decisions we make.”

What happened last time

In March 2022, with inflation running hot, the Fed began raising rates from near zero. It raised them seven times that year, four times by three-quarters of a point, and kept going until July 2023, when the range reached 5.25% to 5.50%.

The first weeks told you almost nothing. After the first hike, the S&P 500 rose about 6% in two weeks. By October it was down 25% from its January high. The index slipped on the day of this month’s decision, closing at 7,552, and reached 7,743 on September 25, which is also what it did after the first hike last time.

Your stocks

A share of stock is a claim on a company’s future profits, and what those profits are worth today depends on what else your money could earn. Warsh called the 10-year Treasury “the risk-free asset upon which every price of virtually every asset in the world is related to.” When that Treasury pays 5%, every stock has to compete with it. The Fed’s own explainer says rate changes affect stock prices “by changing the relative attractiveness of equity as an investment.”

In 2022, Vanguard’s total US stock market fund, the stock sleeve inside its 2030 target-date fund, lost 19.5% including dividends.

Your bonds

A bond is a loan with a fixed payment. When rates rise after you buy it, new bonds pay more than yours does, so yours sells for less. Vanguard’s Total Bond Market Index Fund reports an average duration of 5.7 years, and as a rule of thumb a one-point rise in yields takes roughly 5.7% off its price before interest is paid.

In 2022 the 10-year yield went from 1.52% to 4.25%. Vanguard’s total US bond fund lost 13.2%. CNBC, citing investment historian Edward McQuarrie, called 2022 the worst year on record for US bonds.

The fixed payment has a second problem. It is fixed in dollars, and each of those dollars buys less when inflation runs above target. The safe half of the account is exposed twice to what the Fed is fighting.

Your 401(k)

Americans held $10.8 trillion in 401(k) plans at the end of June, according to the Investment Company Institute. A common way to hold it is a target-date fund. Vanguard’s 2030 fund holds roughly 59% stocks and 40% bonds, and in 2022 it lost 16.3%, about a sixth of the account in one year for someone planning to retire in 2030. That is one named fund in one named year, not a forecast for your account. It is the most recent record of a Fed hiking cycle meeting a stock-and-bond retirement fund.

The answer is gold

Gold pays no coupon, so there is no fixed payment for a rate rise to reprice. It has no earnings to weigh against a 5% Treasury, and no borrower on the other side who has to pay you back. Its price still moves, sometimes sharply, but for different reasons than the other two halves.

In 2022, while stocks fell 19.5% and bonds fell 13.2%, gold finished the year up 0.44% (LBMA Gold Price PM). It was up about 8% at the end of March and down about 7% at the end of September, so the ride was not smooth. From the day the last hiking cycle began, March 16, 2022, to September 21, 2026, gold rose 126% and the S&P 500 rose 78%, both as price changes.

Central banks have been buying. By the end of 2025, according to the European Central Bank, gold made up 27% of the world’s official reserves, more than US Treasuries at 22%. We covered why they are buying in the reason central banks are hoarding gold.

Gold inside an IRA

You do not have to sell your 401(k) to own some gold. Since 1997, federal law has let an IRA hold qualifying gold bullion kept by a trustee in a depository, under 26 U.S.C. 408(m). Whether your plan lets you roll part of an old 401(k) into one is a question for your plan administrator.

It does not have to be all or nothing. On a $400,000 account, a $40,000 position is 10%.

The Fed meets again on October 27 and 28. Its own projections point to one more hike, and Warsh says he won’t pre-judge it.

Chapters

1. 00:00 The Fed just raised rates
2. 01:19 Why the Fed did it
3. 02:38 The last time, in 2022
4. 03:36 Point 1, your stocks
5. 04:49 Point 2, your bonds
6. 06:34 Point 3, your 401(k)
7. 07:52 The answer is gold
8. 09:42 Gold inside an IRA

Where every number came from

Every link below was checked on 27 September 2026, and each figure in the video and on this page traces to one of them.

1. The decision, the meeting calendar and the October 27 and 28 meeting are on the Federal Reserve’s FOMC calendar and its open market operations page.
2. The 4.1% median comes from the Fed’s Summary of Economic Projections of 16 September 2026.
3. The line on equity prices is from the Fed’s explainer, Monetary Policy: What Are Its Goals? How Does It Work?
4. The 10-year yields come from FRED, series DGS10, and the S&P 500 closes from FRED, series SP500.
5. Inflation is the Bureau of Labor Statistics Consumer Price Index.
6. Mortgage rates are Freddie Mac’s Primary Mortgage Market Survey.
7. The fund returns and holdings come from Vanguard’s profiles of the Target Retirement 2030 Fund and the Total Bond Market Index Fund.
8. The $10.8 trillion in 401(k) plans is from the Investment Company Institute.
9. Gold prices are the LBMA Gold Price PM.
10. The shares of gold and Treasuries in reserves come from the ECB’s International role of the euro, June 2026.
11. The IRA rule is 26 U.S. Code 408(m).

Gold IRA Digest does not sell gold. We read the rules and the record, and we publish what they say.

This is general information about interest rates, retirement accounts and gold. It is not investment, tax or legal advice and it does not know your situation. Past returns, including the 2022 figures above, do not predict future results. Talk to a licensed adviser before moving retirement money.