Federal Reserve releases September FOMC projections as rate hike odds hit 99%

The Federal Reserve Board and the Federal Open Market Committee wrapped up their September 15-16 meeting with a closely watched release: the Summary of Economic Projections, the quarterly document that tells markets not just where rates are today, but where policymakers expect them to go.

The timing matters. Markets had been pricing a 99% probability of a 25 basis point rate increase heading into the meeting, making the hike itself less of a surprise than what comes after it.

What the projections show

The expected rate move would shift the federal funds target range from 3.50-3.75% to 3.75-4.00%, extending a tightening cycle that had paused for several consecutive meetings before September.

The June 2026 SEP had already flagged elevated price pressures, with median projections showing real GDP growth of 2.2%, an unemployment rate of 4.3%, and PCE inflation running at 3.6% by year-end. The PCE figure sits well above the 2% target that the central bank has spent years defending.

Analysts going into the September meeting expected the updated projections to push inflation forecasts higher still, and to steepen the rate path relative to what June showed. Tariff pressures and energy costs have continued feeding through to consumer prices.

The dot plot, which maps each FOMC member’s anonymous interest rate forecast, will be the most scrutinized element of the release.

Why this meeting carries extra weight

The Fed publishes the SEP only four times a year, in March, June, September, and December.

The June 2026 SEP itself represented a notable upward revision from the prior March estimates, a pattern that suggests the Fed has been consistently underestimating how sticky inflation would prove.

Broader market implications

A hawkish SEP, meaning higher projected rates and higher projected inflation, tends to pressure long-duration assets first. Treasury yields rise as bond prices fall, the dollar strengthens against currencies in economies with looser monetary policy, and growth-oriented equities face a higher discount rate on future earnings.

The bond market tends to respond most mechanically to SEP revisions. A steeper projected rate path pushes short-term yields up directly, and if markets believe the Fed will follow through, the two-year Treasury yield typically moves in close alignment with the revised dot plot median.

For credit markets, delinquency rates in rate-sensitive categories bear watching as the fed funds rate approaches 4%, a level that represents a significant tightening relative to where the cycle began.

The September projections will not resolve every outstanding question about where the Fed’s terminal rate ultimately lands. For now, the 3.75-4.00% range is the number markets have to work with, and the dot plot will determine how many officials think that is the ceiling versus just another floor.

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