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What Chair Warsh said at the press conference
During the press conference, Federal Reserve Chair Warsh delivered a clear message: inflation remains “too high, and has been for too long.” Recent data have provided little reassurance. Warsh noted that “this summer’s inflation readings do not tell me that underlying trends have meaningfully improved”. He added that price increases remain broad across numerous CPI and PPI categories. According to Warsh, three factors explain the shift from July’s decision to keep rates unchanged to September’s unanimous increase. Economic activity and the labour market have remained strong, inflation has stayed persistently elevated, and geopolitical developments have altered the outlook. Together, these considerations produced what Warsh called a “firm unanimous decision.”
The Chair also stressed that the US economy appears to be strengthening. New hiring, private-sector earnings and business capital investment have improved, while credit flows to companies remain robust. Moreover, Warsh reiterated his sentence from the Fed conference at Jackson Hole that he would be “hard-pressed to describe broad financial conditions as restrictive.” Later he added that this resilience gives the Fed room to remove some monetary accommodation without necessarily undermining the expansion. Warsh described price stability as “foundational to economic growth” and presented the rate increase as an important step towards restoring it. However, he deliberately avoided committing to another move, stating that he is “not in the forward guidance business.” The message is therefore clearly focused on inflation but not pre-committed: further tightening remains possible but any drop in inflation could stop it. The timing and extent of additional action will depend on incoming economic data.
The federal reserve conducted a key rate hike amid elevated inflationary pressures
No forward guidance by Warsh but the FOMC’s dot plot is providing some insights
The Federal Reserve’s new dot plot signals that most FOMC participants expect some additional monetary tightening, but not the start of an aggressive hiking cycle. Following September’s 25-basis-point increase, two participants expect September’s move to be the only hike this year, 12 anticipate one additional increase, and four foresee two more hikes. This places the median policy-rate projection at 4.00–4.25% at year-end, implying one further 25-basis-point step. However, the projected path then flattens: the median rate remains unchanged in 2027 before declining to 3.75–4.00% in 2028 and 3.50–3.75% in 2029. The longer-run rate estimate also rose from 3.06% to 3.25%, suggesting that officials may see the neutral rate as structurally higher. Chair Warsh again did not submit projections.
The updated economic forecasts combine stronger growth with slightly more persistent inflation. Compared with June, median GDP growth was raised by 0.1 percentage point to 2.3% in 2026 and 2.4% in 2027. Meanwhile, the core PCE inflation projection increased by 0.1 percentage point to 3.4% for 2026 and to 2.2% for 2028, while remaining at 2.5% in 2027. Overall, the projections convey a moderately hawkish near-term message but still envisage stable rates next year and gradual easing thereafter.
The latest dot plot shows one additional rate hike for this year but no further rate hike beyond 2026
