The Fed raised rates on Wednesday, thank God.

I say “thank God” because a Fed that failed to follow through on a hike that was priced as a near certainty by markets at a time when inflation risks remain to the upside, the labor market’s steady, consumption’s holding up and the long-end’s looking for an excuse to extend a selloff that’s pushed yields to post-GFC highs was a Fed that courted disaster.

As BMO’s Ian Lyngen remarked on Wednesday morning in the US, there’s “no modern precedent for the Fed failing to deliver a policy outcome that is more than 90% priced in the futures markets.”

Wednesday marked the first hike since July of 2023. The decision was unanimous, which was nice to see.

There’s a time and a place for everything, but September 16, 2026, was neither for a dovish FOMC surprise. “Staying on hold would not only exacerbate concerns about the Fed’s inflation-fighting credibility and political independence ahead of the mid-terms, but also call into question the effectiveness of its communication strategy given how heavily positioned the market [was] for a quart-point rate increase,” BMO’s US rates team went on, in the same note mentioned above.

The new statement was curt, consistent with Kevin Warsh’s determination that less is more when it comes to communications. “Economic activity is expanding at a solid pace. While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient,” the Committee said, adding that productivity growth’s strong and capital investment robust. Job gains are keeping up with the workforce. Inflation, unfortunately, “remains elevated.”

As for the new dot plot — and frankly, I wasn’t entirely sure there’d be one — the median 2026 dot tips one additional hike over the balance of the year. The median 2027 dot reflects no change to policy rates next year. The newly-introduced (and completely useless) 2029 dot is 3.60%, meaningfully higher than the new long run neutral dot, which shifted up by 10bps to 3.20%.

At 4.1%, the unemployment rate projection in the SEP was lower for this year and next (it was 4.3% for both years in the June projections), while the GDP growth outlook was revised to the upside. Both the headline and core PCE projections were bumped up by a tenth to 3.7% and 3.4% for this year, respectively.

Needless to say, the hike — to say nothing of the prospect for another one, presumably in December — won’t go over well with Donald Trump, nor will he be pleased to hear the “median” Fed official doesn’t expect to lower rates next year.

“Today’s policy action will support a timelier return to the Committee’s 2% [inflation] goal,” the statement said, adding that the Fed “will deliver price stability.” Promises, promises.