Fed Projects One More 2026 Hike as Growth Holds and Inflation Cools
Federal policymakers forecast one more interest-rate hike before the end of 2026. That call matters for savers and borrowers because the Fed's benchmark feeds into credit cards, auto loans, mortgages and savings rates. The outlook was released at 2:00 p.m. EDT on September 16, 2026, prepared with the September 15-16 meeting, according to the Federal Reserve.
Growth and jobs
The middle forecast for real GDP, or total output adjusted for inflation, was 2.3% for 2026, 2.4% for 2027, 2.2% for 2028 and 2.1% for 2029, with 2.0% in the longer run. Past growth in the table was 5.8% in 2021, 1.3% in 2022, 3.4% in 2023, 2.4% in 2024 and 2.0% in 2025.
The middle forecast for unemployment was 4.1% in each year from 2026 through 2029, and 4.2% in the longer run. The officials cover GDP growth, unemployment and inflation. The September middle call for 2026 growth was 2.3%, compared with 2.2% in the June 2026 forecast.
Inflation and interest rates
The middle forecast for PCE inflation, the Fed's preferred price gauge based on household spending, was 3.7% for 2026, 2.3% for 2027, 2.1% for 2028, and 2.0% for both 2029 and the longer run. The middle forecast for core PCE inflation, which strips out food and energy to show the underlying trend, was 3.4% for 2026, 2.5% for 2027, 2.2% for 2028 and 2.0% for 2029.
The middle forecast for the appropriate federal funds rate, the short-term benchmark, was 4.1% for 2026, 4.1% for 2027, 3.9% for 2028, 3.6% for 2029 and 3.2% in the longer run. Policymakers forecast one more hike before the end of 2026, Reuters reported.
Uncertainty and Wall Street response
The Summary includes diffusion indexes of officials' uncertainty. Each point stands for the number of officials. KKR's Insights page lists a Macro Insights piece titled 'Flash Macro: U.S. FOMC' dated September 2026 and one titled 'Flash Macro: U.S. Jobs' dated August 2026. It also lists Investment Insights pieces titled 'Real Estate's Underserved Middle' and "High Yield's Second Act: What AI Revealed About Credit Quality," both dated August 2026, according to KKR Insights.
KKR also published an Insights piece titled 'In Brief: Mid-Year Outlook for 2026.' KKR stated that "the relationship between stocks and bonds is changing in a world of higher deficits, stickier inflation, and more frequent geopolitical shocks." KKR released 'The Divergence Conundrum,' the 2026 Mid-Year Global Macro Outlook by Henry McVey, according to Businesswire.
In my view, that mix explains the extra hike signal. Headline inflation falls 1.4 points between 2026 and 2027 while the funds rate holds at 4.1%. Core stays above headline through 2028. Growth stays above its longer-run level through 2029. Unemployment never leaves 4.1%. Officials see output holding up and labor anchored, so they can keep policy tight until goods and services prices converge. The longer-run funds rate at 3.2% keeps the neutral level high, which limits cuts in 2028 to 2029 even as headline inflation returns to 2.0%. For bonds, credit and property math, the risk is not a sharp jobs break. It is sticky core inflation.
