The minutes of the Federal Reserve's September 15-16, 2026 meeting, released on October 7, show that all participants supported raising the federal funds rate by a quarter point to 3.75% to 4.00%, and that "most participants" saw another increase as "likely" to be appropriate by year-end [1]. The median projection in the September dot plot put the rate at 4.1% at the end of 2026, implying one more hike, up from 3.8% in June [2]. The next meeting is October 27-28, 2026 [1].
What did the September 2026 Fed minutes say?
The minutes are a detailed summary of the discussion at each meeting of the Federal Open Market Committee (FOMC), the Fed's rate-setting body, published three weeks after the decision. The September hike was the Fed's first rate increase since July 2023, and the statement was approved 12-0 [3][6].
The central points of the minutes:
- Inflation: Participants "had not seen sufficient progress on lowering inflation in recent months," pointing to higher crude oil and fuel prices from "ongoing geopolitical developments" and to "surging AI-related investments" [1].
- Risks: Participants "generally assessed inflation risk as skewed to the upside," and some said those risks had become more skewed in recent months [1].
- Jobs: Participants judged the labor market "stable" and "close to maximum employment," and a majority saw it as having "strengthened a bit recently" [1].
- Policy path: "Most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year end," while stressing that each meeting is decided on incoming data [1].
Several participants said they viewed the current rate as "not restrictive or only mildly restrictive," meaning it is not high enough to slow the economy much, and a couple said they had raised their estimate of the neutral rate, the level that neither speeds up nor slows down growth [1].
What does the September 2026 dot plot show?
The dot plot shows each official's view of where the federal funds rate should be at the end of each year. In September, 18 participants submitted projections [2].
| Projection (median) | 2026 | 2027 | 2028 | 2029 | Longer run |
|---|---|---|---|---|---|
| Federal funds rate, September | 4.1% | 4.1% | 3.9% | 3.6% | 3.2% |
| Federal funds rate, June | 3.8% | 3.6% | 3.4% | n/a | 3.1% |
| PCE inflation, September | 3.7% | 2.3% | 2.1% | 2.0% | 2.0% |
| Core PCE inflation, September | 3.4% | 2.5% | 2.2% | 2.0% | n/a |
| Unemployment rate, September | 4.1% | 4.1% | 4.1% | 4.1% | 4.2% |
| Real GDP growth, September | 2.3% | 2.4% | 2.2% | 2.1% | 2.0% |
Source: Federal Reserve, Summary of Economic Projections, September 16, 2026 [2]. Inflation and GDP are fourth-quarter-to-fourth-quarter changes; unemployment is the fourth-quarter average; the rate is the year-end midpoint of the target range.
For the end of 2026, 12 of the 18 participants put the midpoint of the target range at 4.125%, which means one more quarter-point hike to 4.00% to 4.25%. Four put it at 4.375%, or two more hikes, and two at 3.875%, meaning no further increase [2]. For 2027, eight participants projected a midpoint of 4.375% and six of 4.125% [2]. The longer-run median rose to 3.2% from 3.1% in June [2].
The projections show inflation well above the Fed's 2% target this year, at 3.7% for total PCE inflation, and falling to 2.3% in 2027 and 2.0% by 2029 [2]. Officials raised their GDP growth projection for 2026 to 2.3% from 2.2% and lowered their unemployment projection to 4.1% from 4.3% [2].
Why are Fed officials worried about inflation?
The Fed staff estimated that PCE inflation, the Fed's preferred measure, rose to 3.8% in the 12 months through August, with core PCE (excluding food and energy) at 3.4% [1]. The staff attributed the rise "mostly to the effects of past tariff increases, higher energy and input costs stemming from geopolitical developments, and an increase in technology-related consumer goods prices associated with the AI buildout" [1].
The official figures came in lower after the meeting. On September 30, under a new methodology that the Bureau of Economic Analysis had announced, August PCE inflation was reported at 3.4% and core PCE at 3.0%, below the 3.7% and 3.3% that economists had expected [1][4]. The staff had estimated in September that the new method would show 3.6% and 3.2% [1].
The minutes also describe second-round risks. Many participants said that "the longer energy prices remained elevated, the greater the risk that cost increases in certain sectors could lead to broader price pressures," and some worried that "after more than five years of inflation above 2 percent," high inflation could start to affect expectations and wage- and price-setting [1]. Market- and survey-based measures of longer-term inflation expectations remained consistent with the 2% goal, the minutes noted [1].
What did officials say about bond yields, AI and the economy?
The minutes give the Fed's reading of the rise in long-term yields. A few participants discussed "incoming data that pointed to a stronger economy, increased expectations for AI-related borrowing, and geopolitical developments" as possible causes [1]. The New York Fed's markets desk reported that commentary also cited the Treasury's buyback program and "competition for capital from heavy private debt issuance to finance the development of artificial intelligence (AI) infrastructure" [1]. DataPorium data show the 10-year Treasury yield at 5.01% on September 16 and 5.24% on October 9, 2026 [6].
Many participants said financial conditions still supported growth, with stock prices up substantially and corporate bond spreads narrow; a few said housing was the exception because mortgage rates remained elevated [1]. Several participants noted that low- and moderate-income households faced strains, "with higher energy prices weighing disproportionately on their real disposable income" [1].
Will the Fed raise rates at its October 2026 meeting?
The minutes reflect views as of mid-September. Data and comments since then have changed market pricing. On September 30, the CME FedWatch tool showed a 35% chance of an October hike, down from about 51% a day earlier, after the softer PCE report [4]. New York Fed President John Williams said the Fed could afford to be patient before hiking again, CNBC reported, and Goldman Sachs economists moved their forecast of the next hike to December [4].
The September jobs report on October 2 showed payrolls up only 29,000 and unemployment at 4.2% [7]. After it, FedWatch put the chance of an October hike at 17%, while still pricing better-than-even odds of a hike by December [5]. These are market probabilities on those dates, not forecasts; the Fed will announce its decision on October 28, 2026 [6].
All FOMC participants backed the September 2026 rate hike, and most saw another increase as likely by year-end, with the median dot at 4.1% for the end of 2026.
Frequently asked questions
When were the September 2026 FOMC minutes released?
The Federal Reserve released the minutes of its September 15-16, 2026 meeting on October 7, 2026, three weeks after the decision [1].
What is the Fed's interest rate now?
The federal funds target range is 3.75% to 4.00% after the September 16, 2026 hike, and the interest rate on reserve balances is 3.90% [1][3].
How many rate hikes does the Fed expect in 2026?
The median September projection of 4.1% for the end of 2026 implies one more quarter-point hike; 12 of 18 participants projected that, four projected two and two projected none [2].
When is the next Fed meeting?
The next FOMC meeting is on October 27-28, 2026, followed by December 8-9, which will include new projections [1][6].
Sources & References
- [1] Federal Reserve, Minutes of the Federal Open Market Committee, September 15-16, 2026 (released October 7, 2026)
- [2] Federal Reserve, Summary of Economic Projections, September 16, 2026
- [3] Federal Reserve, FOMC statement, September 16, 2026
- [4] CNBC, S&P 500 falls Wednesday despite softer-than-expected inflation data (September 30, 2026)
- [5] CNBC, Fed rate hike odds decline after September jobs report (October 2, 2026)
- [6] DataPorium Interest Rates (Fed decisions and Treasury yields)
- [7] BLS, The Employment Situation, September 2026 (released October 2, 2026)
