The Federal Reserve’s September 2026 projections point to a relatively steady federal-funds rate through 2027, followed by gradual easing: the median projection is 4.1% at year-end 2026 and again in 2027, then 3.9% in 2028 and 3.6% in 2029. Those figures are participants’ conditional forecasts, not a promise or a schedule of rate cuts. The path could change if inflation, employment, growth, or financial conditions develop differently.
What the Fed’s September 2026 projections say
The Federal Open Market Committee’s September Summary of Economic Projections (SEP) gives each participant’s view of appropriate policy and likely economic outcomes. The figures below are medians, not a forecast guaranteed by the Fed as an institution.
| Measure | 2026 | 2027 | 2028 | 2029 |
|---|---|---|---|---|
| Federal-funds rate at year-end | 4.1% | 4.1% | 3.9% | 3.6% |
| Real GDP growth | 2.3% | Not stated in the September 2026 SEP figures summarized here | Not stated in the September 2026 SEP figures summarized here | Not stated in the September 2026 SEP figures summarized here |
| Unemployment rate | 4.1% | Not stated in the September 2026 SEP figures summarized here | Not stated in the September 2026 SEP figures summarized here | Not stated in the September 2026 SEP figures summarized here |
| PCE inflation | 3.7% | 2.3% | Not stated in the September 2026 SEP figures summarized here | Not stated in the September 2026 SEP figures summarized here |
Source for all table entries: Board of Governors of the Federal Reserve System, September 2026 SEP; rates are year-end federal-funds-rate projections and the other figures are annual projections. The longer-run median federal-funds rate is 3.2% in the September SEP. The SEP also reports a central tendency, a range, and participants’ assessments of risks; those are distinct from the median and do not amount to odds for a particular Fed decision.
Will interest rates go down in 2026?
The September median does not show a lower year-end federal-funds rate in 2026 than in 2027. It therefore suggests no net decline between those two year-end estimates, followed by a lower median in 2028 and 2029. It does not say when a cut might happen, how many cuts or increases might occur within a year, or what the rate will be between meetings. A year-end projection is not a meeting-by-meeting path.
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Nor is the federal-funds rate the rate a household sees on a mortgage or credit card. Fed policy influences short-term funding conditions and other borrowing costs, but lenders’ pricing also reflects market expectations, loan term, credit risk, lender spreads, and—in longer-term borrowing—term premiums. A Fed cut can therefore be followed by a smaller, delayed, or no immediate change in a particular consumer rate.
What changed from the June 2026 outlook?
Between the June and September 2026 SEP medians, the Fed’s outlook shifted toward somewhat stronger near-term growth and lower unemployment, alongside slightly higher inflation and a higher projected policy rate.
| 2026 or longer-run measure | Change in September median versus June |
|---|---|
| Real GDP growth in 2026 | Raised by 0.1 percentage point |
| Unemployment rate in 2026 | Lowered by 0.2 percentage point |
| PCE inflation in 2026 | Raised by 0.1 percentage point |
| Federal-funds rate at year-end 2026 | Raised by 0.3 percentage point |
| Longer-run federal-funds rate | Raised by 0.1 percentage point |
These are changes in projections, not changes already made to the policy rate. The SEP is updated at scheduled meetings and can move again as the data and participants’ assessments change.
What could shift Fed policy next?
The FOMC describes its projections as based on information available at the meeting and each participant’s assessment of appropriate policy. In the committee’s words: “Appropriate monetary policy is defined as the future path of policy that each participant deems most likely to foster outcomes for economic activity and inflation that best satisfy his or her individual interpretation of the statutory mandate to promote maximum employment and price stability.”
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The following are conditional scenarios for interpreting that framework, not published probabilities or official forecasts of the next move.
| What the data show | Possible policy implication | What that means for borrowing costs |
|---|---|---|
| Inflation stays persistently above the Fed’s objective, particularly if demand and employment remain firm | Officials could keep policy restrictive for longer; a higher rate path could remain under consideration. | Short-term borrowing costs may stay elevated, but the effect on longer-term rates depends on market expectations and lender pricing. |
| Inflation cools while labor demand weakens | The rate path could move lower if officials judge that easing is consistent with their employment and price-stability goals. | Some borrowing rates could fall, but the timing and size of any pass-through would vary by product and lender. |
| Growth strengthens or financial conditions loosen in a way that risks renewed inflation pressure | Officials could be more cautious about easing and keep rates higher for longer than borrowers expect. | Markets may reprice rates before a Fed decision; lenders can also adjust rates for reasons beyond the policy rate. |
No single 2026 probability of a rate cut or hike is provided by the September SEP. Treating the median path as a promise—or assigning it odds the Fed did not publish—would overstate what the projections establish.
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How Fed policy reaches household and business rates
The connection is real but indirect. Policy affects overnight and other short-term funding conditions; consumer rates then reflect the relevant market benchmark, the duration of the loan, lender costs, borrower risk, and competitive pricing. Expectations matter too: a market may move before the Fed acts if investors anticipate a policy change.
| Borrowing product | What to keep in mind |
|---|---|
| Credit cards | Many card rates are variable, so a policy change can influence financing costs, but the card’s terms and the issuer’s pricing determine the actual rate and timing. |
| Auto loans | Rates depend on loan term, credit profile, lender pricing, and market conditions as well as Fed policy; a policy cut does not ensure an equivalent decline in an auto-loan quote. |
| Mortgages | Mortgage rates are shaped by longer-term market rates and term premiums as well as lender spreads and expectations. They do not mechanically track the federal-funds rate. |
| Business borrowing | Pricing varies with the benchmark, loan structure, borrower credit risk, term, and lender; floating-rate and fixed-rate financing can respond differently. |
Should you lock a mortgage rate?
The Fed’s projections cannot tell you whether a particular mortgage quote will be better later. A rate lock is a choice between securing a known offer and retaining the possibility that rates improve while accepting the risk that they worsen. Base the decision on your closing timeline, the cost of the loan you can obtain now, and how much uncertainty you can tolerate—not on assuming that a projected policy path will pass through one-for-one to mortgage rates.
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- Compare the quoted APR as well as the interest rate, points, lender fees, and other closing costs.
- Check whether the quote is fixed or adjustable, how long a lock lasts, and what happens if closing is delayed.
- Ask whether the lender offers a float-down option, what it costs, and what conditions apply; do not assume one is included.
- Review prepayment terms and the total cost over the period you expect to keep the loan, especially if refinancing is part of your plan.
- Compare the cost of locking now with the cost of waiting, including the possibility that the available rate or loan terms become less favorable.
How to use the projections without treating them as a guarantee
- Separate the policy forecast from your loan quote. The SEP median is about the federal-funds rate; evaluate a lender’s actual APR, fees, and terms for the product you need.
- Track the conditions that could change the outlook. Inflation persistence, labor-market weakening or strengthening, growth, and financial conditions can all alter participants’ assessments.
- Plan around outcomes, not a single predicted date. Consider whether your budget works if borrowing costs remain where they are, rise, or fall more slowly than expected.
- Recheck when you are close to acting. Projections can change at each FOMC meeting, and lender offers can change independently as markets and borrower-specific factors move.
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