The meeting of the US Federal Reserve's Federal Open Market Committee began on Tuesday, September 15, 2026. Markets are highly likely to expect a decision to raise the key rate by 25 basis points as early as Wednesday.
Such a move would be the first hike since 2023, when the previous head of the central bank, Jerome Powell, completed a campaign of policy tightening after the pandemic. Inflation has remained above the target level of 2% for more than five years, and the war in the Middle East is adding pressure on prices.
Fed Chair Kevin Warsh emphasized in August at the Jackson Hole symposium: "We still have work to do." Markets estimate the probability of a hike at 92% based on data from the CME FedWatch tool.
Warsh traditionally avoids direct signals about future decisions, preferring that committee members discuss the data at the meeting. Nevertheless, analysts are closely watching the Fed's updated economic projections, including the so-called "dot plot."
Moody's Analytics chief economist Mark Zandi warns: raising rates could be a serious policy mistake. The economy is already growing close to potential, unemployment is slightly above 4%, and inflation above 3% is largely driven by supply shocks — rising energy prices and tariffs that monetary policy cannot quickly fix.
Zandi notes that tightening in order to bring inflation down faster risks pushing growth below potential, triggering layoffs and a negative cycle. An additional factor is investment in artificial intelligence, which is supporting the stock market.
The yield on 10-year US Treasury bonds has reached its highest level since 2007 — 5,04%. Oil prices have confidently exceeded 100 dollars per barrel, intensifying fears about inflation.
The White House has stated its full support for any decision by Warsh, emphasizing respect for the Fed chair's independence. Some experts, however, believe that the decision to raise rates may prove more contentious than market rates suggest.
Which path will the Fed choose amid these contradictory signals?
