Federal Reserve Minutes comparison — 29 April 2026 vs 16 September 2026
This Federal Reserve minutes comparison covers 29 April 2026 and 16 September 2026. Overall, the newer document was more hawkish. The direction of travel has hardened: in April the committee held rates while flagging upside inflation risks and only a conditional willingness to firm further, whereas in September it delivered a unanimous quarter-point hike to 3.75–4.00%, with several participants calling the stance barely restrictive and most pointing to another increase by year-end. With inflation at 3.8% and participants seeing no recent progress, the next decision is more likely to be another hike than a cut unless…
What changed
More hawkish. The direction of travel has hardened: in April the committee held rates while flagging upside inflation risks and only a conditional willingness to firm further, whereas in September it delivered a unanimous quarter-point hike to 3.75–4.00%, with several participants calling the stance barely restrictive and most pointing to another increase by year-end. With inflation at 3.8% and participants seeing no recent progress, the next decision is more likely to be another hike than a cut unless disinflation resumes clearly or the labour market deteriorates.
- Inflation — More hawkish. Headline PCE inflation rose from 3.5% in the prior reading to 3.8%, the staff forecast was revised up for 2026–2028, and participants explicitly stated they had seen insufficient progress on lowering inflation, with upside risks judged to have become more skewed.
- Labour Market — More hawkish. The prior characterisation of a stable, little-changed labour market with elevated downside employment risks gives way to a labour market described as broadly stable with signs of gradual tightening, close to maximum employment, and with risks now broadly balanced and diminished.
- Rate Path — More hawkish. April's data-dependent hold, with conditional firming only if inflation persisted and several participants open to cuts, is replaced by a unanimous 25 basis point hike to 3.75–4.00%, several participants viewing the stance as not or only mildly restrictive, and most participants guiding to a further increase by year-end.
- Balance Sheet — Little changed. Both documents confirm an ample-reserves regime with no balance-sheet expansion, and September's pause in reserve management purchases reflects reserves judged sufficient rather than a directional change, with the discount rate simply stepped up alongside the policy rate.
Key wording
The survey results and market-based measures of inflation compensation pointed to longer-term expectations remaining well anchored near the Committee's 2 percent longer-run inflation objective.
market-implied expectations still indicated that market participants anticipated little change this year in the target range for the federal funds rate, and options prices implied around a 30 percent probability of a rate hike by the first quarter of 2027.
In the Desk survey, the median of the modal paths continued to show two 25 basis point rate reductions over the next year, but respondents now expected them to occur later than in the previous survey, with rate cuts expected in the third or fourth quarter of 2026 and the first quarter of 2027.
A model-based decomposition of changes suggested that the increase in the two-year nominal yield since the start of the conflict in the Middle East reflected a sizable increase in expected inflation, offset to some degree by a decline in the expected real interest rate, a combination consistent with the realization of an adverse supply shock.
Based on data from the consumer and producer price indexes, the staff estimated that total PCE price inflation rose to 3.5 percent in March, boosted by a sharp increase in energy prices; March core PCE price inflation was estimated to be 3.2 percent.
The unemployment rate was 4.3 percent in March and had changed little, on net, since the middle of the previous year.
Based on data from the consumer and producer price indexes, the staff estimated that price inflation—as measured by the 12-month change in the price index for total personal consumption expenditures (PCE)—edged up to 3.8 percent in August, led by a pickup in consumer energy prices after they had declined during the previous two months.
Regarding expectations for U.S. monetary policy, the manager noted that the market-implied path for monetary policy had risen notably over the intermeeting period and that both market prices and market outreach indicated that investors placed high odds on a 25 basis point increase in the target range for the federal funds rate at the September meeting.
The manager also observed that considerable uncertainty remained about the path of policy at longer horizons.
The staff's inflation forecast was somewhat higher for 2026 through 2028 than the one prepared for the July meeting.
Risks to the inflation forecast were seen as skewed to the upside, given the possibility that inflation could prove to be more persistent than the staff anticipated.
Labor market conditions continued to be broadly stable with some signs of gradual tightening.
Official documents
Background reading
Related
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