USA: FOMC Hikes by 25bp; Median Dot Shows One Additional Hike in 2026 and No Policy Changes in 2027; SEP Raises Core Inflation Slightly

BOTTOM LINE: The FOMC raised the funds rate target range by 0.25pp to 3.75-4.00% at its September meeting, the first hike since July 2023. There were no dissents from the Committee's decision. The post-meeting statement noted that inflation "remains elevated" and that "today's policy action will support a timelier return to the Committee's 2 percent goal." The median forecast in the Summary of Economic Projections (SEP) projected one additional hike in 2026 and no changes to the fed funds rate in 2027. Chairman Warsh did not submit projections. The median SEP forecast projected slightly higher core and headline PCE inflation in 2026, suggesting the FOMC expects limited downward revisions from the upcoming methodological changes later this month or chose not to incorporate expectations for those revisions at this point, as well as higher GDP growth and a lower unemployment rate. The median dot also showed the fed funds rate at 4.00-4.25% in 2027, 3.75-4.00% in 2028 and 3.50-3.75% in 202