The Federal Reserve’s next interest rate decision arrives on September 16, 2026, with the Federal Open Market Committee also publishing updated economic projections and its dot plot of individual rate expectations. The decision lands six days after the Bureau of Labor Statistics releases the August Consumer Price Index on Friday, September 11, at 8:30 a.m. ET, a report that will serve as the final inflation data point before policymakers vote. Markets are currently pricing 60 to 65 percent odds of a 25-basis-point rate hike, according to CME FedWatch and prediction market data, a probability that has climbed steadily since Fed Chair Kevin Warsh’s hawkish remarks at Jackson Hole in late August.
Key Takeaways
- The FOMC’s next rate decision is September 16, 2026, with the committee also releasing updated economic projections and its dot plot; the current federal funds rate target range is 3.50% to 3.75%, unchanged since December 2025.
- The Fed held rates on July 29 in a divided 9–3 vote; three dissenters — Cleveland’s Beth Hammack, Minneapolis’ Neel Kashkari, and Dallas’ Lorie Logan — each preferred a 25-basis-point hike to 3.75%–4.00%.
- J.P. Morgan Wealth Management shifted its base case to a 25-basis-point September hike, citing continued supply-chain disruptions and investor doubts about the Fed’s willingness to contain inflation.
- July CPI came in at 3.4% year-over-year, with energy components remaining elevated; the August CPI report is scheduled for Friday, September 11, at 8:30 a.m. ET.
- Market-implied probability of at least one 2026 rate hike has risen to approximately 70.5%, driven by Warsh’s Jackson Hole remarks and persistent above-target inflation readings.
- Unemployment remains stable at approximately 4.1%, while private payrolls added only 38,000 jobs in August, the slowest monthly pace since January.
The July FOMC Vote Exposed a Rare Fracture Inside the Committee
The July 29 FOMC statement described U.S. economic activity as expanding at a solid pace, noted that job gains have kept pace with the workforce, and repeated that inflation remains elevated relative to the committee’s 2 percent goal, citing supply shocks in energy and other sectors. The 9–3 vote to hold rates steady was notable for the identity and reasoning of the dissenters. Beth Hammack, Neel Kashkari, and Lorie Logan each preferred a quarter-point hike, a level of dissent in favor of tightening that is unusual in modern FOMC history and signaled that a rate increase remained a live possibility heading into the fall.
Under Chair Kevin Warsh, who took the position in early 2026, the Fed has pared back its forward guidance, leaving markets to rely more heavily on incoming data between meetings rather than on the committee’s signaling about its future intentions. That shift in communication style has increased the importance of each individual data release, because traders can no longer depend on the Fed to telegraph its next move weeks in advance. The result is a market that swings more sharply on economic reports and Fed speeches than it did under the prior chair’s more explicit guidance framework.
Friday’s CPI Report Is the Final Inflation Signal Before the Vote
The August Consumer Price Index, scheduled for release at 8:30 a.m. ET on Friday, September 11, will function as the last major inflation data point before the FOMC meets the following week. July CPI came in at 3.4% year-over-year, with energy components remaining elevated due to supply disruptions linked to the conflict in the Middle East. Core CPI, which excludes food and energy, has been running above the Fed’s 2% target for more than three years.
The August CPI report arrives as rising oil prices and mixed labor market signals complicate the Fed’s calculus heading into the September meeting. A reading that comes in above expectations would likely push hike odds higher and force equity markets to price in a tighter policy path. A softer-than-expected print could provide cover for the committee to hold rates steady and wait for additional data before acting, though the hawkish contingent on the committee has shown it is prepared to push for a hike regardless of marginal improvement in a single month’s numbers.
The Cleveland Federal Reserve’s inflation nowcast, which provides daily estimates of current-month inflation before the official BLS release, has been tracking above the 3% level for the August period, suggesting the report may not deliver the kind of sharp deceleration that would take a rate hike off the table entirely.
Warsh’s Jackson Hole Remarks Reset Market Expectations
Fed Chair Kevin Warsh delivered remarks at the Federal Reserve’s annual Jackson Hole Economic Symposium in late August that markets interpreted as decidedly hawkish. Warsh emphasized the need to restore confidence in returning inflation to the 2% target, language that signaled he views the current rate level as potentially insufficient to complete the disinflationary process. The speech did not explicitly commit to a September hike, consistent with Warsh’s broader approach of avoiding specific forward guidance, but the tone was enough to shift market pricing significantly.
Following the Jackson Hole remarks, market-implied probability of at least one 2026 rate hike rose to approximately 70.5%. J.P. Morgan Wealth Management revised its base case from no rate changes in 2026 to a 25-basis-point hike in September, citing two specific catalysts: continued supply-chain shocks tied to the conflict in the Middle East that are keeping energy costs elevated, and increased investor doubt about the Fed’s willingness to keep inflation contained after the committee left rates unchanged in July despite persistent above-target readings.
The shift in J.P. Morgan’s call is significant because the firm had been among the institutions arguing that the Fed would hold rates through the end of the year. When a major Wall Street forecaster moves from a hold to a hike, it often triggers repositioning across the fixed-income and equity markets that amplifies the move in probability-implied pricing.
Labor Market Data Sends Mixed Signals Into the Decision
The employment picture heading into the September meeting is contradictory in ways that make the Fed’s job more difficult. Unemployment remains stable at approximately 4.1%, a level that is historically consistent with a healthy labor market and that does not, on its own, argue for either tightening or easing. The FOMC’s July statement described job gains as having kept pace with the workforce, a characterization that suggests the committee views the labor market as neither overheating nor deteriorating.
However, the most recent hiring data has softened. The ADP National Employment Report showed private-sector employers added just 38,000 jobs in August, the slowest monthly pace since January 2026. The July employment situation report from the BLS showed employers cut 23,000 jobs, a sharp miss against forecasts for roughly 85,000 new positions, and prior months were revised downward by a combined 103,000 jobs. That weakness briefly pushed hike odds lower before Warsh’s Jackson Hole speech reversed the momentum.
The tension between stable unemployment and weakening job creation is precisely the kind of ambiguity that makes the September dot plot as important as the rate decision itself. If the updated projections show a majority of FOMC participants expecting at least one more hike before year-end, markets will treat the September meeting as the beginning of a tightening sequence rather than a one-and-done adjustment.
Bond Markets Have Already Begun Pricing In Tighter Policy
The fixed-income market has moved ahead of the Fed. The 10-year Treasury yield climbed to approximately 4.77 to 4.79 percent in early September, its highest level since January 2025, while the 30-year yield reached 5.24 to 5.30 percent. The two-year yield, which is more sensitive to near-term rate expectations, has held near 4.16% following the weak July jobs report but has not declined meaningfully, suggesting traders view the softness in employment data as insufficient to prevent the Fed from hiking.
The Federal Reserve’s September Beige Book, released September 2, reported that economic activity increased modestly since early July, with 10 of 12 Federal Reserve districts recording slight to moderate growth. Employment rose very slightly overall, and prices increased moderately across most districts. The Beige Book’s characterization of energy costs and Middle East-related uncertainty as headwinds on business confidence reinforced the narrative that inflation pressures are structural rather than transitory, a distinction that matters for how the committee frames the rate decision.
What to Watch on September 11 and September 16
The sequence of events over the next week will determine whether the Fed delivers its first rate hike since 2023 or extends the hold that has been in place since December 2025. Friday’s CPI report sets the stage. If August inflation comes in at or above 3.4% year-over-year, the hawkish case for a September hike becomes difficult to resist, particularly given Warsh’s public positioning and the three July dissenters who have already telegraphed their preference. A reading below 3.2% would give the hold camp a data point to cite, though the bar for a downside surprise large enough to shift the committee’s trajectory is high.
On September 16, the FOMC statement, the updated Summary of Economic Projections, the dot plot, and Warsh’s post-meeting press conference will arrive as a package. The rate decision itself is binary, but the accompanying materials will shape market expectations for the remainder of 2026 and into 2027. A hike accompanied by a dot plot showing no further increases would be received differently than a hike paired with projections of additional tightening.
FAQs
When Is the Next Fed Rate Decision?
The Federal Open Market Committee is scheduled to announce its next interest rate decision on Wednesday, September 16, 2026. The committee will also release updated economic projections and its dot plot of individual rate expectations.
What Is the Current Federal Funds Rate?
The federal funds target range is 3.50% to 3.75%, where it has been held since December 2025 following three quarter-point cuts in September, October, and December 2025.
When Is the August CPI Report Released?
The Bureau of Labor Statistics will release the August Consumer Price Index on Friday, September 11, 2026, at 8:30 a.m. ET. The report is the final major inflation reading before the FOMC meets the following week.
What Are the Current Odds of a September Rate Hike?
Markets are pricing approximately 60 to 65 percent odds of a 25-basis-point rate hike at the September meeting, with the broader probability of at least one 2026 rate hike at approximately 70.5%, based on CME FedWatch and prediction market data.
Why Did Three FOMC Members Dissent in July?
Cleveland’s Beth Hammack, Minneapolis’ Neel Kashkari, and Dallas’ Lorie Logan each voted for a 25-basis-point rate hike at the July 29 meeting, citing persistent above-target inflation and the risk that holding rates too long could allow inflation expectations to become unanchored.
