The Fed Raised Rates. CFOs Should Reforecast These Five Assumptions.

The rate outlook changed quickly. Finance teams should assume their forecast may need to change with it.

On September 16, the Federal Open Market Committee unanimously raised the federal funds target range by 25 basis points to 3.75%–4.00%. The Fed said economic activity remained solid and inflation remained elevated. What had been a pre-meeting scenario is now the operating environment finance teams need to reflect in borrowing, liquidity, capital-allocation, and forecast assumptions.

The move followed the Fed’s July decision to hold rates at 3.50%–3.75%. The September Summary of Economic Projections put the median end-2026 federal funds rate at 4.1%, up from 3.8% in June. That points to a higher-for-longer planning environment even though the exact policy path remains uncertain.

For CFOs, though, the practical question is not whether you can predict the Fed. It is whether your forecast can absorb a meaningful change in the rate environment without forcing the organization to start over.

1. Reprice borrowing and refinancing assumptions

A quarter-point policy move does not translate mechanically into a quarter-point increase in every borrowing cost, but it is enough to justify rerunning the debt schedule. Floating-rate debt, lines of credit, planned refinancings, equipment financing, and any transaction dependent on the cost of capital should be revisited.

I would not stop at a single +25-basis-point case. The better exercise is to show management what happens if rates remain higher for longer and if market yields move more than the Fed itself. On September 14, the U.S. 10-year Treasury yield moved to roughly 5%, its highest level since 2023, illustrating why the broader financing environment can matter as much as the policy rate itself.

If an investment or refinancing only works under last month’s rate assumption, that is a decision signal—not a modeling inconvenience.

2. Revisit what cash is worth—and what liquidity is worth

Higher rates can improve the yield on short-term cash, but that benefit should not be confused with liquidity strength. A company earning more on reserves can still have a cash problem if collections slow, capital spending accelerates, or refinancing becomes harder.

This is a good moment to separate operating cash, true reserves, and cash already committed to near-term obligations. Finance teams should also make sure treasury assumptions in the forecast reflect realistic yields rather than stale rates carried forward from an earlier planning cycle.

The CFO question is not simply, “Are we earning more on cash?” It is, “How much cash is truly available if the downside case arrives?”

3. Raise the bar on marginal capital projects

When the risk-free rate and financing costs rise, the economics of marginal projects get weaker. That should feed directly into hurdle rates, payback expectations, acquisition models, technology investments, and other discretionary capital decisions.

This does not mean “stop investing.” It means the finance function should distinguish between investments that remain compelling under a higher cost of capital and investments that only look attractive because the discount rate is too low.

One of the most useful disciplines is to recalculate the project under the new financing environment before changing the strategic narrative. Let the economics move first. Then decide whether the strategic value is strong enough to overcome them.

4. Stress customer demand and receivables—not just interest expense

The second-order effects may matter more than the direct cost of debt. Higher rates can pressure customers, donors, sponsors, homebuyers, developers, small businesses, and other counterparties differently depending on the organization’s business model.

A finance team should therefore examine whether a higher-rate environment changes sales timing, renewal assumptions, payment behavior, bad-debt risk, or days sales outstanding. For nonprofits, the analogous question may be whether corporate partners, foundations, or major donors become more cautious as markets and financing conditions tighten.

If the macro assumption changes but the revenue and receivables assumptions do not, the forecast may be internally inconsistent.

5. Rebuild the range, not just the base case

The biggest lesson from this week is not that one rate call changed. It is that the consensus changed quickly.

That is exactly why a serious forecast should not be one number. A useful update would show a base case in which rates rise modestly and remain elevated, a downside case that combines tighter financial conditions with weaker demand and slower collections, and an upside case in which inflation pressure fades and future tightening proves unnecessary.

The assumptions should be explicit enough that management can see what changed from the prior forecast. If the difference between two forecast versions is hidden inside a spreadsheet, the model is doing accounting work—not decision work.

The decision is in. The reforecast should not wait.

The September decision is now known: the Fed raised rates by a quarter point, and the updated projections show a median 4.1% federal funds rate at year-end 2026. Finance teams should therefore treat another move as a live scenario rather than a remote tail case.

A CFO does not need to predict the next meeting perfectly. The job is to build a forecast that can absorb multiple outcomes. That is why forecasting with ranges rather than a single point estimate matters more when policy is moving.

That is the practical takeaway: rerun the assumptions that depend on rates, liquidity, capital costs, customer behavior, and forecast ranges. If the answer changes materially, management should know before the next board package—not after it. For the liquidity side, the 13-week cash flow forecast template can help turn the rate change into a weekly cash view; for capital decisions, see what a 5% Treasury yield changes.

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Sources & notes

Sources: Federal Reserve FOMC statement, September 16, 2026; September 2026 Summary of Economic Projections; and Reuters coverage of the rate decision.