Reasoning
The June 2026 SEP median for year end 2026 funds rate was 3.8 percent, with the current target range at 3.50 to 3.75 percent as of the June 17 FOMC meeting. For the December SEP to show a higher median, economic conditions between now (September 28, 2026) and December would need to shift materially toward higher inflation or stronger growth, prompting the Committee to project rate increases. However, with rates already held steady since June and nine of eighteen participants already projecting above current range, the marginal path from 3.8 percent higher faces headwinds: typically late year SEPs show modest drift rather than sharp moves, and the fact that the Committee just signaled a pause in June suggests limited appetite for near term hikes. Historical patterns show SEP medians for the same calendar year typically shift gradually, and a 10 basis point plus move upward in just six months would represent meaningful hawkish repricing.Key uncertainty
The inflation data released between September and December 2026, particularly core PCE momentum, which could force the Committee to materially revise rate expectations either upward or downward from the June baseline.