--- title: The Fed Is Weighing a Supersized Rate Hike. Here’s How That Could Affect Your 401(k) description: The Fed may consider a supersized rate hike. Here's how higher interest rates could affect your 401(k). authors: - name: Pete Grieve role: Lead News Reporter url: https://money.com/author/pete-grieve/ bio: Pete Grieve is a personal finance reporter. In his time at Money, Pete has covered everything from car buying to credit cards to the housing market. education: University of Chicago, BA Political Science at_money_since: 2022 articles: 617 covers: - Retirement - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Shopping - Taxes social: - https://twitter.com/pete_grieve - https://linkedin.com/in/pete-grieve-b5aa02138 - https://www.facebook.com/petegrieve4 editors: - name: Katherine Peach role: Associate Editor url: https://money.com/author/katherine-peach/ bio: Katherine Peach is an associate editor with a focus on news and email at Money. She didn’t always intend to write about money. She’s a classically trained pianist who dreamed of becoming an archaeologist. However, in 2007 Katherine began working in financial publishing as an editor for Agora Inc. (Apparently, unearthing ideas about improving your personal finances isn’t such a bad career alternative!) Katherine’s writing and editing work has been featured in Investing Daily, Clever, Investor Junkie, The Palm Beach Letter, Truth & Plenty, Independence Monthly, NICHE, AmericanStyle, AntiqueWeek, Millennial Money, Money Done Right, TheStreet, Sure Dividend and many others. Katherine holds a Bachelor of Arts in Ancient Studies with concentrations in Archaeology and Ancient Languages and a minor in Literature from the University of Maryland, Baltimore County. She is a member of Phi Beta Kappa. education: University of Maryland, Baltimore County at_money_since: 2025 articles: 15 covers: - Retirement - Banking - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Federal Reserve Rate Cuts - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Shopping - Taxes published: '2026-11-13T13:25:44.000Z' section: Retirement tags: - News word_count: 610 canonical: https://money.com/fed-rate-hike-401k-impact/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Fed building and 401k](https://img.money.com/2026/11/News-401k-fed-hike.jpg) The Federal Reserve is widely expected to raise [interest rates](https://money.com/fed-rate-hike-effects-september-2026/) at its Dec. 8-9 meeting, and policymakers may consider a "supersized" half-percentage-point rate hike — an option that would send shockwaves through markets and weigh on 401(k) balances. The CME Group's FedWatch tool places the odds of a quarter-point increase at 87%, with a 13% chance of a larger, half-point hike. In their latest comments, several voting members of the Federal Open Market Committee, or FOMC, have [hinted](https://www.wsj.com/economy/central-banking/fed-forced-to-confront-case-for-bigger-and-faster-rate-rises-ac181706) at preferring the more aggressive option. "It may be possible to move more rapidly this winter than the FOMC has moved so far this fall," Dallas Fed President Lorie Logan said at a conference in Houston on Tuesday. The latest [consumer price index (CPI) report](https://www.bls.gov/news.release/cpi.nr0.htm) showed that prices rose 0.4% in October, exceeding economists' forecasts. Due to the 2025 government shutdown, an annual inflation rate could not be calculated. Annual inflation was last reported at 3.7% for September. ## What a rate hike would mean for 401(k)s Retirement savers with 401(k)s invested partly in stocks are nervously waiting to see what the Fed will do next. Historically, higher interest rates have put [downward pressure](https://money.com/how-high-interest-rates-impact-stocks-bonds/) on stock valuations, particularly for growth-oriented companies whose future earnings become less attractive when borrowing costs rise. That could hurt retirement savers with significant exposure to stocks, especially technology shares. The Fed controls the fed funds rate, which influences how much banks charge each other for short-term loans. Changes to that benchmark can ripple through the economy, affecting everything from mortgage rates and credit card borrowing costs to the yields banks offer on certificates of deposit (CDs). At the same time, the Fed's rate decisions affect the borrowing environment for corporations. Companies that rely heavily on financing, including startups and tech companies, can be among the most vulnerable to higher rates. The Nasdaq suffered its [worst single-day drop](https://www.reuters.com/legal/transactional/ai-data-center-stocks-slip-democratic-sweep-clouds-expansion-plans-2026-11-05/) in over a year on Nov. 5 as it fell 5.5% amid questions about the future of AI. (Since then, the Nasdaq has bounced back.) Politicians often credit positive performance of 401(k)s to their leadership. After his party's midterm defeat, President Donald Trump has continued to tout stock market gains over the past two years, while blaming the Democrats for recent volatility. "Right after the election, \[the stock market\] went down $3 trillion. That was because of the result of the election, because the stock market does not want to see Democrats. And your 401(k)s have gone way down because of the ridiculous result," Trump [told reporters](https://rollcall.com/2026/11/12/some-democrats-doubt-trump-is-serious-about-cutting-deals-in-new-congress/) at the White House Monday. Administration officials are now arguing that a half-point rate hike would be a mistake, predicting that oil prices will fall as conflicts settle. Christopher Phelan, chairman of the White House Council of Economic Advisers, acknowledged in a [Bloomberg Television interview](https://www.bloomberg.com/news/audio/2026-11-10/bloomberg-talks-chris-phelan-talks-october-cpi-podcast) Tuesday the CPI report was "not a good number," but he argued that diesel and gas were largely responsible. Average gas prices finally dropped below $4 this week, according to [AAA](https://gasprices.aaa.com). But will fuel prices keep falling — and actually stay down? Many analysts expect the war with Iran to continue and say that high oil prices and inflation will persist. Savers are advised to [continue their routine 401(k) contributions](https://money.com/dont-check-your-401k-this-week/), even when interest rates are increasing. "The big driver of inflation has been oil prices, and we don’t think the Iran conflict will end anytime soon," Skyler Weinand, chief investment officer at Regan Capital, wrote in a note Tuesday. "Stocks have taken a beating of late and have seen a large rotation out of AI plays and into more durable and defensive sectors like healthcare… but earnings should continue to benefit from high levels of government and corporate spending." ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/fed-rate-hike-401k-impact/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Retirement", "item": "https://money.com/retirement/" }, { "@type": "ListItem", "position": 3, "name": "401(k)", "item": "https://money.com/401k/" }, { "@type": "ListItem", "position": 4, "name": "The Fed Is Weighing a Supersized Rate Hike. 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