Fed Delivers Expected Rate Hike. More on the Way?

The news is out and as was widely expected, the Fed delivered a 25 basis point rate hike, putting the Fed funds rate between 375-400 basis points in a vote that tallied 12-0 across voting members. With that 12, we know Fed Chair Warsh voted to raise rates even though he abstained from participating in the data that would form the updated Set of Economic Projections (SEP).

In the September SEP seen above, we find the Fed lifted its 2026 and 2027 GDP expectations modestly, but doesn’t see a meaningful step down in inflation this year and both the PCE and the core PCE are not hitting 2.0% until 2029. That explains the 50 basis point move higher in the updated SEP’s Fed Funds rate at 4.1% and sets the expectation for one more rate hike before the end of the year.

With two meetings left, one in October and one in December, the question will soon become will the Fed deliver that next hike before the midterm elections? Either way, that’s one more than the market was expecting before the end of 2026 per the CME FedWatch Tool earlier today. 

Now, we have the would be facts, and in the coming press conference we’ll get the color as we assess the comments from Fed Chair Warsh and his tone.