Reasoning
The June 2026 SEP median for year end 2026 funds rate was 3.8 percent, representing a 40 basis point increase from the March SEP median of 3.4 percent. For the December SEP to show a higher median, it would need to rise above 3.8 percent, implying additional rate increases between now and the December meeting despite the current target range being 3.50 to 3.75 percent and unchanged since June 17. With only nine of eighteen SEP participants projecting year end rates above the current range, the median participant anticipates at most one 25 basis point increase from current levels, leaving limited room for the median to rise further. The recent elimination of a cutting bias and steady rates suggest the Committee has moved to a pause, making upward SEP revisions less likely absent significant inflation acceleration or growth surprises.Key uncertainty
Whether inflation data between August and December 2026 accelerates unexpectedly, prompting Fed officials to raise their terminal rate projections and shift the December SEP median upward from the already hawkish June level.