Fed forecasts another hike in 2026; Warsh’s abstention draws attention

The Fed’s latest economic projections show another possible rate hike in 2026, but the outlook drew more attention because new Chair Kevin Warsh did not submit his own forecast.

Among the 18 officials, 9 projected the federal funds rate would be above the current 3.5% to 3.75% range by the end of 2026. At the press conference, Warsh also confirmed that he did not provide any personal forecast.

The current median rate forecast 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 0.25 percentage points above the current target range.

Warsh, newly installed as Fed chair, has signaled that he wants to reform the central bank’s communication strategy. He believes officials may have given too much forward guidance and spent too much effort mapping out the future policy path.

Meanwhile, the Fed’s policy statement was also rewritten more extensively than usual. In recent years, changes were often limited to just a few words or sentences, but Wednesday’s statement was sharply shortened.