09-29-2026 - History Says the Fed Isn’t Done Yet

Since 1994, the Fed’s 2nd policy change (tightening and easing cycles) has been in the same direction as the 1st policy change 91% of the time (11 out of 12 completed cycles). Once the 2nd policy change matches the 1st, the 3rd change matched direction 100% of the time. Half of all cycles reached at least 7 changes. The longest cycle was 17 policy changes.

Fed Funds futures are currently implying 3 additional 25 bps tightenings, one by the end of this year and two more by mid-2027. If the Fed is done tightening after that, there would have been 4 target changes in this current cycle. Seventy-five percent (75%) of previous post-1994 cycles reached at least 4 changes. If the Fed does stop at 4 tightenings, that would put the target range at 4.50%-4.75%, a level last seen in November of 2024. This was during the last easing cycle (the Fed eased to this level on November 7, 2024). At that time, PCE inflation for September 2024 was the most recent number available. It was 2.1% year over year (YoY). It was later revised to 2.3%. Either way, it was much lower than the current (July 2026) 3.7% YoY rate.

If this newest cycle is not of the rare one-and-done variety, then “modern” Fed history shows we’ll likely have at least 2 more tightenings to endure before the cycle is complete. The newest FOMC dot plot shows only 1 more. We shall see.