A Chairman Who Declines to Own His Forecast
At his press conference on September 16, Fed Chair Kevin Warsh offered the public a tidy piece of humility. The central bank, he said, “cannot affect any individual price,” whether at the gas pump or the grocery checkout, but it could work to keep any change in relative prices from broadening out, from producing “second and third order effects on the economy.”
It is a reasonable description of monetary policy’s actual reach. It is also, conveniently, a description with no falsification clause attached. If prices broaden out anyway, the Committee can say the hike softened what would otherwise have been worse. If they do not, the Committee takes the credit. Either outcome confirms the theory, which should always make you suspicious of the theory.
There is a second detail worth sitting with, buried in the fine print of the Summary of Economic Projections released the same afternoon. Of the 19 seats on the Committee, only 18 participants submitted a projection for 2028 and 2029, and Warsh himself is understood to have again declined to submit his own dot for the federal funds rate, a habit he established at his very first meeting as chair back in June.
A central banker who will tell reporters, at length, what the Committee is trying to accomplish, while declining to put his own number on paper for where rates should go, has found a genuinely elegant way to be accountable for the rhetoric and insulated from the record.
What the Dots Actually Say
The rhetoric was calm. The dots were not. In June, the median FOMC participant projected the federal funds rate would end 2026 at 3.8 percent, consistent with the one quarter point hike that had already been substantially priced in. By September, with that hike delivered and the range sitting at 3.75 to 4 percent, the median projection for year end had moved up again, to 4.1 percent.
Read plainly: the Committee did not simply catch up to where it said it was headed. It moved the target further away, in the same direction, in the same meeting where it congratulated itself for a “timelier return” to 2 percent inflation.
The inflation numbers explain why. Median PCE inflation for 2026 came in at 3.7 percent, versus 2.0 percent, the Committee’s own longstanding target, a gap that would embarrass most institutions into using the word “elevated” more than once in a press release. Core PCE, which strips out food and energy on the theory that doing so reveals the underlying trend, sat at 3.4 percent.
Seventeen of eighteen participants said the risks to inflation were weighted to the upside. Seventeen of eighteen said their uncertainty about inflation was higher than normal. This is not a committee that is confident inflation is cooling. This is a committee that voted to raise rates while telling you, through its own survey data, that it expects to be wrong in the direction of more inflation, not less.
The One Number That Actually Moved in the Fed’s Favor
Credit where it is due. The unemployment rate projection improved, from a June median of 4.3 percent to 4.1 percent in September, and GDP growth ticked up slightly as well. That is the justification buried inside the jargon of “economic activity is expanding at a solid pace.” A labor market that is not cracking gives the Committee room to lean against inflation without immediately worrying about a recession it is causing. It is a coherent policy position.
It is just not the position that got spoken aloud at the podium, where Warsh’s framing stayed centered on prices rather than on the fact that a resilient labor market is precisely what buys the Fed room to keep hiking.
Reading the Distribution Instead of the Median
The median number flatters the Committee with an appearance of consensus that the underlying distribution does not support. Figure 2 in the SEP shows twelve participants clustered around a year end midpoint near 4.125 percent, but four sit higher, near 4.375, meaning four members of the Committee think two more quarter point hikes belong on the table before December, not one.
Two participants sit lower, at 3.875, essentially arguing the September hike should not have happened at all. That is not a unanimous outlook dressed up as a single dot. That is a room with real disagreement about how much further to go, compressed into a median that makes the disagreement disappear.
An institution that wants credit for transparency does not get to publish the distribution and then let the chair speak only in the language of the median. The dots, read honestly, say the Fed expects to keep hiking into a labor market it currently likes and against an inflation number it currently distrusts. Warsh, at the microphone, said something calmer and vaguer, and declined to attach his own name to either number.
The public got the speech. The institution kept the paper trail to itself.
Primary sources: Federal Reserve, September 2026 Summary of Economic Projections; Federal Reserve, September 16, 2026 FOMC statement.
