Fed projections call for a rate hike in 2026, but Chairman Warsh abstained

The Federal Reserve’s latest projections pointed to one rate increase in 2026, though the outlook was complicated by the absence of a forecast from Chairman Kevin Warsh.

Nine of 18 officials projected that the federal funds rate would end 2026 above its current range of 3.5% to 3.75%. However, the projections appeared to be missing one participant, and Warsh confirmed in the press conference that he refrained from offering any projections of his own.

The median projection now calls for the federal funds rate to end 2026 at 3.8%, up from 3.4% in the Fed’s March summary and a quarter percentage point above the current target range.

Warsh, who just took over as Fed chair, has signaled a desire to overhaul the central bank’s communications strategy, arguing that officials may provide too much forward guidance and place excessive emphasis on mapping out the future path of monetary policy.

The Fed’s policy statement also underwent a far more extensive rewrite than is typical. In recent years, changes have often been limited to a handful of words or sentences, but Wednesday’s statement was dramatically pared down.