BlockBeats reported on Sept. 19 that global markets were shaken this week by a mix of Federal Reserve tightening, Middle East conflict, and a growing dispute over whether AI development should slow. The Fed delivered its first rate hike since July 2023, lifting rates to 3.75%–4% in the first policy move under Chair Warsh. The Bank of Japan also raised rates to their highest level in 31 years, but the yen weakened instead of strengthening. In the Middle East, pressure on the Strait of Hormuz and Saudi energy infrastructure persisted, prompting Saudi Arabia to begin repairs on damaged oil pipeline capacity. At the same time, AI companies began openly debating development speed, while Turkish equities tumbled on fund redemptions and liquidity stress.
Fed votes unanimously to raise rates in Warsh’s first move
The Federal Reserve lifted rates by 25 basis points to 3.75%–4%. It was the first increase since July 2023 and the first policy adjustment since Warsh took over as chair.
The dot plot showed that 16 of 18 officials expect at least one more rate hike in 2026. The median rate projection for 2026 rose from 3.8% to 4.1%. Warsh said inflation remained 「too high, and for too long」 and added that current financial conditions were not restrictive. Trump, for his part, said U.S. rates 「should be 1% or lower」.
Bank of Japan hikes, but the yen keeps slipping
The Bank of Japan raised its policy rate by 25 basis points to 1.25%, the highest level in 31 years. It also said it would continue adjusting policy if the economy and prices develop in line with expectations.
Even so, the yen did not strengthen. The report said the move had already been largely priced in, and two board members opposed the hike. USD/JPY instead moved above 157.
Middle East tensions hit shipping and Saudi oil routes
Friction around the Strait of Hormuz continued this week, with multiple merchant ships and oil tankers coming under attack. Shipping costs rose noticeably. At the same time, Houthi forces kept targeting Saudi energy facilities, adding to risks in the Red Sea and the Bab el-Mandeb Strait.
Saudi Arabia has started building a bypass around its damaged east-west pipeline in an effort to restore transport as quickly as possible. On the diplomatic side, Iran was cleared to send its president and foreign minister to New York for the United Nations General Assembly. Contact between Washington and Tehran pointed to limited signs of easing, though the risk of military escalation remains.
AI companies publicly discuss slowing frontier model progress
Executives at Anthropic, OpenAI and xAI have recently discussed slowing the pace of capability gains in frontier models while strengthening safety testing and audits. OpenAI also released a disclosure framework for 「model misalignment」 and published six cases involving abnormal behavior.
Meta and Nvidia, however, were described as taking a different view on a coordinated slowdown across the industry. At the same time, U.S. courts accepted civil lawsuits against Anthropic, OpenAI, xAI and Google, putting AI safety, regulation and capital spending more squarely in focus for markets.
Turkish stocks hit by a liquidity shock
Turkey’s BIST 100 index fell throughout the week. On Wednesday alone, it dropped 5.54%, and at one point slid more than 7% intraday, triggering a circuit breaker. The immediate trigger was tied to redemptions at domestic investment funds and broader liquidity problems, with multiple funds unable to meet redemption requests on time.
Turkey’s central bank then expanded repo financing to 300 billion lira. Regulators also suspended trading in some funds and lowered margin requirements for financing trades. The market rebounded on Thursday.
Russia-Ukraine energy ceasefire still has not materialized
Trump had previously said Russia and Ukraine agreed to stop attacking each other’s energy facilities, but neither side has confirmed a formal deal. Strikes on refineries, energy assets and port facilities are still continuing.
According to Reuters data cited in the report, three of Russia’s six largest diesel refineries have either halted production or sharply reduced output after drone attacks. The Russian government is also said to be preparing to extend restrictions on diesel exports.
Kioxia weighs a major U.S. fundraising plan
Kioxia is moving ahead with plans for a U.S. ADS listing. Bloomberg said the company is considering raising at least $10 billion through ADRs, with the move potentially coming as early as 2027, though the final size and timing have not been set.
At the same time, Solidigm, a subsidiary of SK Hynix, is evaluating a NAND flash manufacturing site in the eastern United States. Rising demand from AI data centers has pushed up memory chip prices and market revenue, and storage makers are accelerating their U.S. manufacturing footprint.