Fed forecasts 2026 rate hike: Warsh abstention draws attention
The Fed's latest economic projections suggest a possible rate hike in 2026, but the outlook is complicated by Fed Chair Kevin Warsh's decision not to submit his own forecast.
Among 18 officials, 9 expect the federal funds rate by end-2026 to be above the current 3.5%-3.75% range. However, one participant's projection appears missing. Warsh confirmed at the press conference that he did not provide any personal projection.
The median rate forecast shows the federal funds rate reaching 3.8% by end-2026. That is up from 3.4% in the Fed's March SEP, and 0.25 percentage points above the current target range.
Warsh, who recently took over as Fed chair, has signaled a desire to overhaul the central bank's communication strategy. He believes officials may have provided too much forward guidance and invested too much effort in mapping out the future monetary policy path.
Meanwhile, the Fed's policy statement underwent a more extensive rewrite than usual. In recent years, statement changes were typically limited to a few words or sentences, but Wednesday's statement was significantly shortened.
