FOMC raised 25 bp as expected
Materially more hawkish than the Goldman “hike today, then wait” setup. The 4.1% median is the key.
With today’s new range at 3.75%–4.00%, the midpoint is 3.875%. One more 25 bp hike takes the midpoint to 4.125%, which the SEP reports as 4.1%.
So the median dot is very cleanly saying another hike by year-end.
Current reporting says 16 of 19 participants see that final 2026 hike.
Fed dot plot signals another 2026 rate hike as growth strengthens and inflation remains elevated
The median policy-rate projection rises to 4.1% for 2026, with officials also lifting the projected rate path sharply in 2027 and 2028 The median federal funds rate projection for the end of 2026 increased to 4.1% from 3.8% in June. Because the projections are rounded to one decimal place, that represents a roughly 25-basis-point upward shift in the projected policy path.
Importantly, the new 4.1% median also points to one additional 25-basis-point rate hike by year-end from today’s new target range.
What I find more important is the whole path moving upward, rather than the extra 25 bp itself. In June, the Fed medians were 3.8% for 2026, 3.6% for 2027 and 3.4% for 2028. From the new plot, the message looks approximately:
2026: 4.1% → another hike
2027: ~4.1% → essentially hold it there
2028: ~3.6% → easing eventually resumes
Long run: ~3.1%
That is a much bigger change than merely saying “one more this year.” The Fed has effectively shifted from “tighten a bit, then gradually normalize” to “tighten and keep policy restrictive for longer.”