Fed funds rate after Sep 2026 meeting?

Persistent inflation beyond energy shocks and a strong labor market signal higher rates. To warrant the Federal Open Market Committee (FOMC) holding interest rates above 4.00%, key indicators would include sustained Consumer Price Index (CPI) strength not primarily driven by energy shocks, alongside a labor market and wage environment conducive to delaying rate cuts ^{[^]}. CPI persistence beyond global energy prices, which the Federal Reserve has explicitly cited as a factor in elevated inflation, is the most crucial inflation signal for maintaining restrictive rates ^{[^]}. Although the Bureau of Labor Statistics (BLS) CPI-U for March 2026 reported a +3.3% year-over-year increase with energy as a significant contributor, continued CPI strength from other sectors would be necessary to justify a federal funds rate above 4.00% ^{[^]}.

Recent labor market data supports delaying rate cuts, contrary to current market pricing. The March 2026 nonfarm payrolls report, which showed total nonfarm payroll employment increasing by +178,000, unemployment at 4.3%, and average hourly earnings rising +0.2% month-over-month (+3.5% year-over-year), presents a labor-market and wage mix consistent with delaying rate cuts ^{[^]}. Such conditions would further support maintaining a higher policy rate if CPI remains elevated ^{[^]}. However, the prediction-market proxy currently implies a post–September 16, 2026, meeting midpoint around 3.13%, indicating that market pricing does not anticipate the need to hold rates above 4.00% unless material surprises in future CPI or Nonfarm Payrolls data significantly reprice this projected path ^{[^]}.

Goldman Sachs anticipates rate cuts, reaching 3.00%-3.25% by 2026. The institution projects a terminal level of 3.00%–3.25% for the Fed funds rate by September 2026, specifically anticipating a pause in January 2026 followed by rate cuts in March and June 2026 ^{[^][^]}. This outlook is underpinned by expectations of economic growth reaccelerating to 2.0%–2.5% in 2026 and a cooling of inflation, which would mitigate risks to the easing path. Goldman Sachs also cites below-trend underlying job growth and favorable wage and income effects, suggesting that these labor market dynamics will further justify a gradual easing over time ^{[^][^]}.

J.P. Morgan expects steady rates, but within the target range. J.P. Morgan Asset Management, conversely, anticipates the Federal Reserve to maintain current rates through at least the first half of 2026, believing that policy is near neutral and the Committee will await a decisive shift in the balance of risks before acting ^{[^]}. The institution also highlights potential inflation acceleration in mid-2026, stemming from factors like tariffs and fiscal stimulus, as a reason to avoid early rate cuts ^{[^]}. J.P. Morgan Global Research similarly suggests that 2026 will primarily involve holding rates steady, with any future cuts contingent on a material weakening of the labor market or worsening energy fallout ^{[^]}. However, even with this cautious approach, the actual Fed target framework as of March 18, 2026, was 3.50%–3.75% ^{[^]}, indicating that by September 2026, the rate could still fall within the 3.00%–3.50% band through limited or gradual adjustments rather than a rapid easing cycle ^{[^]}.

The Federal Reserve projects a 3.4% median federal funds rate by 2026. The Federal Reserve's Summary of Economic Projections (SEP), released on March 18, 2026, indicates a median federal funds rate of 3.4% for the end of 2026. This projection also shows a 70% confidence interval for the rate, ranging from 2.4% to 3.9% for the same period ^{[^]}.

A direct comparison with futures market implied rates is not possible. A direct comparison between the Fed's SEP and the implied interest rate level from the Fed funds futures market for the September 2026 meeting cannot be made based on the provided research. While resources like CME's FedWatch methodology and Polymarket prediction markets exist, the retrieved sources do not contain a citable, specific implied interest rate level for September 2026 from the futures market. Consequently, the necessary data for a direct comparison of specific rate levels is unavailable ^{[^]}.

Current estimates for the neutral rate of interest (r-star) show variations across different models. The New York Fed's DSGE model projects a real r of 1.9% for 2026 ^{[^]}. In contrast, the FOMC's March 2026 Summary of Economic Projections (SEP) indicates a median longer-run nominal federal funds rate of 3.1%, suggesting an approximate real r of 1.1% when accounting for an assumed 2% inflation rate ^{[^][^]}.

Long-term projections for r-star and federal funds rates vary across models. Beyond 2026, the New York Fed DSGE model anticipates a gradual decrease in the real r, from 1.9% in 2026 to 1.1% by 2029 ^{[^]}. Other estimates include the Cleveland Fed's real r of 1.5% for 2025Q2, which corresponds to a nominal neutral rate of 3.7% ^{[^]}, and a geometric mean calculation yielding an r* of about 1.43% ^{[^]}. The FOMC's March 2026 SEP further outlines long-term federal funds rate expectations, forecasting a median of 3.4% for 2026, followed by 3.1% for both 2027 and 2028 ^{[^][^]}.

A potential Trump presidency could introduce inflationary fiscal policies. A Donald Trump administration is expected to prioritize corporate tax reduction and the extension of the Tax Cuts and Jobs Act (TCJA) ^{[^][^][^]}. These measures are generally considered inflationary due to their potential to increase demand or widen deficits ^{[^][^]}. Tariffs, another key policy component, could further escalate goods prices, delaying disinflation and potentially hindering Federal Reserve rate cuts ^{[^]}. Federal Reserve research, reported in April 2026, indicated that tariffs implemented through November 2025 contributed to a 3.1% increase in core goods Personal Consumption Expenditures (PCE) prices by February 2026, accounting for almost all "excess inflation" in this category ^{[^]}. This suggests tariffs could sustain elevated inflation, necessitating a tighter monetary policy environment through September 2026 ^{[^]}.

The Federal Reserve is holding rates steady, balancing inflation and labor market conditions. As of late April 2026, the Federal Open Market Committee (FOMC) maintained its federal funds rate target range at 3.50%–3.75% ^{[^][^]}. Policy discussions continue to weigh persistent inflation against a softening labor market ^{[^]}. The timing of any rate cuts, whether before or after September 2026, will depend on the progression of disinflation ^{[^]}. The Fed's Summary of Economic Projections from March 18, 2026, shows a 2026 federal funds rate midpoint of 3.4%, implying that scenarios leading into September 2026 are likely to involve no change or only minor adjustments unless inflation data dictates otherwise ^{[^]}. Market expectations from Polymarket corroborate this, showing a 74% probability of "No change" by September 2026, indicating an outlook of continued monetary restraint or very modest easing ^{[^]}.

The market-implied post-meeting fed-funds midpoint after the Sep 16, 2026 FOMC decision is shown around 3.13% [^] . This contrasts with the federal funds effective rate of 3.64% as of May 7, 2026, which corresponds to the prevailing target range of 3.50%–3.75% ^{[^][^]}. The CME FedWatch Tool is explicitly designed to show probabilities of FOMC target rate moves based on 30-day Fed Funds futures pricing ^{[^]}.

The Federal Reserve’s FOMC calendar shows the Sep 2026 decision meeting is associated with Sep 15–16, 2026, with the Sep 16 date referenced for the decision materials [^] . A prediction market for the “Fed decision in September?” shows “No change” at 74% and “25 bps decrease” at 19% regarding the Sep 2026 FOMC statement outcome ^{[^]}.