JPM on Fed

J P M O R G A N North America Economic Research 16 September 2026

After almost four months of sternly vowing to deliver on price stability, Fed Chair Economic and Policy Research Warsh finally went along with the rest of the FOMC in a unanimous decision to Michael Feroli raise the funds rate 25bp to 3.75-4.0%. The dots delivered a clear message that the ( Committee sees another hike this year as likely appropriate: 16 of 18 who submitted projections see at least one more rate hike this year. Moreover, most of JPMorgan Chase Bank NA

the Committee sees that rate or higher as appropriate for next year. In his first two press conferences, Chair Warsh talked tough about the Fed’s commitment to price stability, even as policy was unchanged. Today, his words were similarly hawkish, with an “unequivocal” and “unwavering” resolve for price stability. However, this time it was delivered against the backdrop of the rate hike, adding to the credence of the message from the dot plot. For our part we continue to look for one more hike at the December meeting, in line with the revised median FOMC expectations.

First, a few quick observations on the dots (tables below). Of the 18 who submitted dots (Warsh did not), only two projected no further change in rates this year, 12 had one more hike, and four had two more hikes. The ’27 dots were surprisingly hawkish: 14 had dots at current rates or higher. Closer to expectations, the ’28 and ’29 dots saw a slow return to neutral, with a median 25bp cut expected each year. The median-longer run dot was revised up from 3.06% to 3.25%, the highest since 2016. While this was expected it was hard to completely reconcile with Warsh’s comments, who said both he and his colleagues were “hard-pressed” to describe policy as restrictive. Equally challenging to the interpretation of the longer-run dot was Warsh’s comment that today’s action removed a “dose of accommodation.” The Chair was given a chance to clear this up with a question on short-run vs long- run neutral, but as with many questions, his answer didn’t really address what was asked.

While much of the intermeeting focus was understandably on inflation, some of the more interesting developments related to the Committee’s views on growth. One of the only notable changes in the statement was to add an observation that “domestic spending has been resilient.” The median GDP outlook for ’26 and ’27 was revised up a tenth—not a huge revision, though the diffusion index of risk weightings skewed to the upside by the highest amount in the published series going back to ’07. For his part, Chair Warsh also mentioned better growth outcomes as one of the things that has changed since July to justify a hike. The unemployment rate forecasts also became more optimistic, this year revised down to 4.1%—a tenth under their estimate of the natural rate of unemployment—and then staying there over the duration of the forecast horizon. The risk weighting on the u-rate outlook turned optimistic for the first time since 2021.

The core inflation forecast for this year was revised by a little less than we forecast, up only a tenth to 3.4%. However, the ’28 median also moved up a tenth to 2.2%. While the forecast for ’28 is almost certain to be way off, it does help to build a narrative about what the Committee is seeing and what it hopes to achieve with its policy action. For most of the year, Fed speakers have pointed to the pass-through from adverse supply shocks driving inflation higher. However, the constellation of today’s revisions suggest that the Committee may be seeing a growing risk of demand-led overheating, a risk that policy may need to lean into. A few times Chair

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Michael Feroli North America Economic Research ( September 2026 JPMORGAN

Warsh was asked about what rate hikes would do to offset inflation driven by supply shocks. He didn’t directly answer these questions—in one instance he simply didn’t answer at all— but as we come out of blackout we will learn more about the narrative driving the unanimous vote to raise rates.

FOMC federal funds rate forecasts (median values eoy) Meeting date Longer run…