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The Ledger Letter
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Warsh Got Every Vote. Then the Chart Split.
The Fed raised a quarter point to 3.75% and 4.00% yesterday, its first increase since July 2023. All twelve voters agreed, after a July meeting that split nine to three. Sixteen of eighteen participants now pencil in at least one more hike this year. Then the agreement stops. For 2027 the same chart shows eight wanting another hike, six holding and four cutting.
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The Breakdown
Today’s disagreement sits inside one document. The committee is united about this year and split three ways about the next.
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| 01 |
The Vote No Desk Expected
Desks had spent a week guessing which governor would dissent. None did. The decision was unanimous, twelve to nothing, from a committee that voted nine to three to hold in July.
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| 02 |
The Chart Moved
June’s dot plot put the end of 2026 at 3.8%. The new one has sixteen of eighteen participants expecting at least one more hike this year, four of them seeing two. The market was right and the old chart was stale.
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| 03 |
Then It Fell ApartFor 2027 the dots scatter: eight see another hike, six see a hold, four see cuts. Nine of seventeen have rates flat or higher in 2028. Ten see no cuts at all through 2029.
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By the Numbers
| New Target Range | 3.75% to 4.00% |
| The Vote | 12 to 0, from 9 to 3 in July |
| Dots, One More in 2026 | 16 of 18 |
| Dots, 2027 | 8 hike, 6 hold, 4 cut |
| Statement Length | 130 words, against 166 in July |
| 2-Year Treasury | Near 4.73%, up 6 to 7 basis points |
Figures from the Sept. 16 decision, statement and Summary of Economic Projections. Sources: Federal Reserve; CNBC; TheStreet; Yahoo Finance.
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Agreement on the Year, Not the Decade
Twelve to Nothing
The surprise was not the quarter point. That was priced. The surprise was the vote. In July this committee split nine to three on holding. Yesterday every voter raised. Warsh put it plainly at the press conference. Inflation has been too high for too long, he said, with too many categories running above 3% over six and twelve months. On that reading there was nothing left to argue about.
The Answer to Wednesday’s Question
Yesterday morning this letter asked which chart would move, the Fed’s or the market’s. The Fed’s moved. June had the end of 2026 at 3.8%. The new dots put sixteen of eighteen participants on at least one more hike, and four of those on two. Futures had been carrying about 4.2% since Monday. The committee walked to the market rather than the other way round.
Where the Unity Ends
Turn the page in the same document and the picture breaks. For 2027 eight participants want another hike, six want a hold and four want cuts. That is not a forecast. That is three different economies. Nine of seventeen have the rate flat or higher in 2028. Ten see no cut at all before 2029. A unanimous vote on Wednesday tells you about six weeks. The scatter after it tells you about three years, and it says the committee has no idea.
What to Watch Now
Stocks rose on the announcement, then turned lower while Warsh spoke. The two-year finished near 4.73%. The statement ran 130 words. Questions lasted about twenty two minutes. That is this chair’s way of saying the document is the message. Watch the October contract. If it holds the second hike after a presser that offered no guidance, the market has decided it believes the dots. If it fades, the unity you saw yesterday was about one meeting and nothing more.
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They agreed completely about this year, and about every year after it they agreed on nothing.
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