Fed expects one more hike in 2026; Warsh abstains, drawing attention

The Fed's latest economic projections show one hike in 2026, but the outlook is complicated by the fact that Fed Chair Kevin Warsh did not submit a forecast.

Of the 18 officials, 9 projected that the federal funds rate would be above the current 3.5% to 3.75% range by the end of 2026. However, one participant's data appears to be missing from the projection set, and Warsh confirmed at his press conference that he did not provide any personal forecast.

The median rate forecast now shows the federal funds rate at 3.8% by the end of 2026. That is above the 3.4% shown in the Fed's March Summary of Economic Projections and is 0.25 percentage point above the current target range.

Warsh, who has just taken over as Fed chair, has signaled he wants to overhaul the central bank's communication strategy completely. He believes officials may have offered too much forward guidance and devoted too much effort to mapping the future path of monetary policy.

Meanwhile, the Fed's policy statement was rewritten far more extensively than usual. In recent years, changes have typically been limited to a few words or sentences, but Wednesday's statement was heavily shortened.