FOMC Meeting Summary: September 2026

On September 16, the Federal Open Market Committee (FOMC) held its second meeting under Chairman Kevin Warsh, at which the rate was raised by 25 bps to a range of 3.75–4.00%.

In the forecasts provided, the Committee slightly improved its GDP and employment forecasts. Short-term inflation forecasts were raised, while long-term forecasts were unchanged.

According to most voting members, the median federal funds rate forecast implies a level of 4.1% (an additional +0.25%) through the end of 2027. The long-term forecast range: 3.00–3.50%. Warsh again did not provide his own forecasts.

Comments on Kevin Warsh’s speech

The chairman’s main message: the decision was made at a time when the U.S. economy is strengthening. Inflation risks are tilted to the upside, while labor market risks are roughly balanced. Inflation is too high and has remained so for too long. Recent data do not indicate any improvement in the situation.

On the journalist’s first important question about whether only a small rate increase would be enough, Warsh did not give a direct answer, but noted that the Fed would carry out its task of containing inflation.

Today’s actions show that the Fed is serious and will try to achieve its inflation target in a shorter time frame (note: the Fed’s median forecasts imply reaching the target only in 2029). Over the next few months, we will have more data, but I will not comment on future actions.

Kevin Warsh

Warsh also added that he found it difficult to describe current financial conditions as restrictive.

Accordingly, such hawkish points indicate that the Fed has shifted to a more restrictive stance on inflation. The decision to raise rates by 25 bps was unanimous, reinforcing the signal that the current rate level is not sufficient to bring inflation back to target.

Warsh described the U.S. economy as resilient: the labor market remains in good shape, domestic demand is holding up, and capital investment and credit flows appear strong. That means if the economy does not look weak, the Fed has less reason to tolerate inflation above target.

Final takeaway

On the one hand, a very important hawkish signal is visible not only in the rate hike itself, but also in the updated FOMC forecasts — the median implies that the rate will remain around 4.1% through the end of 2027. In other words, the Committee is pointing to a tighter policy path for a longer period.

On the other hand, it feels as though Warsh is building a preventive verbal measure into his rhetoric. He is trying to convince markets that the new leadership of the regulator will not tolerate inflation above target and is ready to act if necessary. If the market accepts this signal, it could help lower inflation expectations and tighten financial conditions. In such a scenario, the regulator may not need a series of additional rate hikes — it would be enough to maintain confidence in the Fed’s resolve.

However, the key risk to such a scenario is energy and commodity price pressure. If rising energy prices begin to pass more broadly into business costs and inflation expectations, strong communication alone may not be enough, and the Fed will have to back up its rhetoric with further action.

Why it is important to follow FOMC meetings

Federal Reserve decisions directly affect the cost of capital worldwide. They influence equity and bond valuations, the U.S. dollar exchange rate, investment returns, and risk appetite. Even if the rate is unchanged, the Fed’s rhetoric can set the tone for markets for a long time, signaling the prospects for tighter policy, a pause, or future easing.