Fed dot plot points to 4.1% policy rate by end-2026

The Federal Reserve raised its policy rate by 25 basis points at its September meeting, taking the target range to 3.75%–4.00%. The Federal Open Market Committee (FOMC) voted unanimously, 12–0. In its statement, the Fed said the move should help bring inflation back to its 2% goal more quickly. Officials described growth as robust while noting inflation remains elevated. The updated "dot plot" released with the decision suggests many policymakers see more tightening ahead. Twelve of 18 officials penciled in a 4.1% federal funds rate by the end of 2026, implying another 25-basis-point increase from the current level. Four officials projected two additional hikes, putting the year-end rate around 4.4%. Two officials forecast 3.9% and do not expect any further rate increases this year. Overall, 16 of 18 officials indicated at least one more hike would be appropriate by year-end. Looking further out, the dot plot showed a median policy rate of 4.1% at the end of 2027 and 3.9% at the end of 2028. The Fed also nudged up its estimate of the long-run federal funds rate to 3.2% from 3.1%. Inflation projections were revised higher as well. The 2026 headline PCE inflation forecast was increased to 3.7%, while the 2026 core PCE inflation forecast was raised to 3.4%. Market attention now turns to the Fed Chair's press conference for guidance on the timing of any additional rate hikes implied by the dot plot and the updated inflation outlook. *This is not investment advice. Continue Reading: BREAKING: The Fed's "Dot Plot" Containing Its Forecasts Has Been Released—Here Are the Expectations