The FOMC decides next week before its preferred inflation gauge for August arrives

Between the 4.125% the committee projects for this year and next and the 3.875% it puts on the end of 2028 sits exactly one quarter point ^[2][3][1]. Two years of projections, one cut. Last year's three cuts averaged a quarter point each ^[5], and if the one further hike the dots imply is the same size, the level set on the 16th is 3.875%, the same number the committee pencils for the end of 2028 ^[6].

Warsh said it was hard to describe current financial conditions as restrictive, and that the Fed had removed part of its earlier easing ^[11]. The committee's own forecasts back the first half. The projected year-end rate sits about 0.4 points above the 3.7% PCE inflation the Fed now expects for this year, a tenth higher than it expected in June ^[2][9]. In a news conference that ran 28 minutes, Warsh said: "The underlying strength of the economy gives us room to focus on price stability." ^[5][6]

The spread of dots under the median is where the budget risk sits. Of the 18 officials other than Warsh, 12 saw one more hike this year, four saw two and two preferred a hold. That leaves 16 of the 18 pointing above the level just set ^[16][3]. Warsh's own dot is not in that count, according to the Seoul Economic Daily, and he did not rule out that this increase leads into a new tightening cycle ^[2][15].

The statement text moved the same way. A line from the previous version saying that supply shocks in some sectors, including energy, had driven prices higher was dropped. The reference to the "July conflict in the Middle East" became "geopolitical developments", and the committee added that domestic spending is solid ^[13]. Asked whether a rate increase could answer higher global oil prices from a blockade of the Strait of Hormuz, Warsh said the Fed's job was not to hold down energy prices. Its job was to keep price changes from spreading through the broader economy and producing second- and third-round effects ^[14].

The same account reads the 2028 projection as reflecting concern that interest costs on U.S. federal government debt could grow too heavy ^[4]. Warsh's own explanation of the higher 10-year Treasury yield pointed elsewhere. He cited a stronger economy, competition among hyperscalers to secure capital spending funds, and conflicts around the world, and left aside the national debt and market distrust of the government ^[20]. He also said "Productivity growth is strong and capital investment is solid" ^[8]. On the war between the U.S. and Israel and Iran he avoided direct comment, steering clear of a head-on clash with the Trump administration, the Seoul Economic Daily reports ^[19].

Markets focused on the unanimous vote arriving alongside a lifted dot plot and read it as hawkish ^[17]. I think that beats the partial-reversal framing. The Wall Street Journal, in the same account, called it striking that officials who had unanimously voted to hold in June were persuaded to dissent three months later. It described Warsh as the most hawkish chair since Paul Volcker ^[18]. The counter-case is employment: Warsh described the economy as close to full employment, and against that sits slowing wage growth alongside a low unemployment rate, evidence that job growth in quantitative terms is sluggish ^[21]. If payrolls weaken before the next meeting, the two hold dots become the swing bloc, the stated plan of a one-off move of one or two hikes turns out to be literal ^[1], and this hawkish reading fails.