Fed funds rate after Dec 2026 meeting?

Waller: “I anticipate additional hikes to support a timelier return of inflation to our 2% goal. But there is some flexibility about when those hikes will occur. The hikes do not need to come at consecutive meetings, but they should be in place in an acceptable period of time.”

Fed minutes: “With regard to the outlook for monetary policy beyond the current meeting, most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year end.” https://www.federalreserve.gov/monetarypolicy/fomcminutes20260916.htm

Our September 2026 Survey of Consumer Expectations shows that households’ inflation expectations increased at the short- and medium-term horizons and remained unchanged at the longer-term horizon. Labor market expectations mostly improved with unemployment rate, job finding, job loss, and quit expectations all improving.

New from the New York Fed: "By February 2026, tariffs had contributed 2.9 pp to goods price inflation, and without them goods prices would have fallen slightly." About one quarter of every point in higher tariff rates shows up in consumer prices within one year. • A 10% across-the-board tariff yields a 2.6% rise in consumer goods prices after one year. • About two thirds of the increase comes from pricier imports, which get passed through quickly. • Another third comes from U.S. made goods, as producers face higher input costs and less import competition. This takes longer, about 6-12 months, to filter through.

Dallas Fed President Lorie Logan says the Fed likely will need to raise rates by at least another 50 bps to ensure inflation doesn’t settle above the central bank’s 2% goal. Logan said those additional increases, together with September’s, would merely reverse the three cuts the Fed made last year. She said the Fed needs to set interest rates at a modestly restrictive level, a threshold that remains uncertain and could require even more increases. Logan drew a distinction on the run-up in bond yields. To the extent higher Treasury yields reflect expectations of a more aggressive Fed, those increases “don’t do our work for us,” she said. But if the increase in yields is driven by rising term premiums, or the extra compensation investors demand to hold longer-term debt, the moves “can slow the economy, reducing the need to tighten monetary policy.”

Headline PCE prices rose 0.31% in August (after +0.05% in July and -0.10% in June). The six-month annualized inflation rate was 3.6%, versus 3.3% for six months before that and 2.3% for the year-earlier period. The 12-month change was 3.4%.

Fed governor Michael Barr: “In my base case, further policy adjustments are likely to be needed to ensure inflation comes down to target in a timely fashion.” On inflation making no progress: “I count only two months of data consistent with 2% core PCE inflation over the past 20 months. And I don’t yet see a clear trend toward a timely return to 2%.” Barr sketches out his thinking on AI-related developments. In the short run, it is leading to price increases that are spreading into products that require computer chips. It is also supporting consumer spending through wealth effects, he says. In the long run, he is optimistic it will boost productivity, which would mean “the economy can grow faster, and real income can grow more, without feeding to higher inflation.” The hardest part of this, for rate-setters, is assessing the next two to five years. He flags the potential for shifts in savings and investment to boost the equilibrium rate, though he says it is “too early to know if these dynamics are in play right now.” Then, he pivots to the outlook: “What is clear right now is that inflation is too high.”

New Fed guidance: “There is no need for urgency.” John Williams, the vice chair of the FOMC, delivers notably precise pushback in guiding against an October rate hike that has been getting priced by investors. https://www.newyorkfed.org/newsevents/speeches/2026/wil260929 He lays out his base case: One more hike “may be appropriate late this year.” Following Warsh’s press conference two weeks ago, markets had pushed pricing of an October rate increase above 50% — to as high as 70% in futures markets in recent days. Here is the key passage from the NY Fed president’s prepared remarks on Tuesday afternoon: “With the policy action we took at our September meeting, there is no need for urgency, and we have time to gather more information. The accumulation of more data should provide greater clarity on the underlying trends in the economy and the associated risks to achieving our goals—and thereby the appropriate setting of monetary policy.” “If the economy evolves in a manner broadly consistent with my forecast, one further upward adjustment of the federal funds target range may be appropriate late this year to support a timelier return of inflation to target. But that is just my forecast, and time—and the totality of the data—will tell.”