The big picture
The Federal Reserve's September projections now put the 2026 median federal funds rate at 4.1% and the longer-run rate at 3.2%, a shallower path than June's. That single revision is the mechanism behind two of today's pieces: Japan's cabinet approved a two-year consumption tax cut on food and beverages that Finance Minister Katayama says will be funded without special deficit bonds, while the same outline keeps the defence spending target at 3.5% of GDP under consideration — both commitments draw on the same annual bond issuance. The Finnish supervisory authority's finding that insurers use the standard-formula solvency ratio as a de facto risk limit, and the ECB's use of household expectations surveys as a direct policy input, both point to the same gap: the measures institutions rely on are not the ones their exposures actually run through.
On the watchlist
- The Bank of Japan's next policy meeting: a further rate increase alongside the cabinet's two-year food tax cut would test Finance Minister Katayama's pledge to fund it without special deficit bonds.
- Japan's budget compilation: whether the defence spending target at 3.5% of GDP survives alongside the food tax cut in the same annual bond issuance plan.
- The ECB wage tracker's 2027-Q1 reading at 2.7%: a print above that level would undercut the Banco de España's reading of a modest negotiated pay pickup.
- The BMA's consultation on its phased insurer resolution regime closes 15 December 2026, with the BMA Act 1969 and Insurance Act 1978 amendments to follow.
- The SEC's proposal to rescind the shareholder-proposal rule: the comment period and any state-law response will determine where the cost of a contested solicitation lands.
Top stories
Why it matters The 2026 median at 4.1% and the longer-run rate at 3.2% mean the front end stays higher for longer, so any portfolio priced off a faster descent to neutral — duration, rate-sensitive equities, carry — reprices against the Committee's own path.
The Federal Reserve's September 2026 Summary of Economic Projections (SEP) shows a median projected federal funds rate of 4.1% at the end of 2026, above the June projection, and 3.2% in the longer run, unchanged from June. The projected medians decline across 2027, 2028 and 2029, and each year stands above the June projection for the same year. This upward revision to the policy path is the central finding: the Committee now expects a shallower and slower descent to its longer-run neutral rate.
The inflation projections explain the shift. Median PCE inflation is 3.7% in 2026, moderating to 2.3% in 2027, 2.1% in 2028, and at the inflation target in 2029. Core PCE inflation is 3.4% in 2026, 2.5% in 2027, 2.2% in 2028, and returns to the Federal Reserve's target in 2029. The 2026 core rate is only modestly below June's projection, but the 2027 core rate is revised slightly higher than June's, indicating a slower expected disinflation. Real GDP growth is projected at 2.3% in 2026, 2.4% in 2027, 2.2% in 2028, and 2.1% in 2029, with a longer-run rate of 2%. The unemployment rate is 4.1% in 2026, 4.1% in 2027, 4.1% in 2028, and 4.1% in 2029, with a longer-run rate of 4.2%.
The SEP is based on eighteen FOMC participants' individual projections, with medians, central tendencies, and ranges reported. The confidence intervals around these projections are derived from historical forecast errors over the previous twenty years, but the Fed cautions that the dispersion of projections across participants is much smaller than the average forecast errors, and that the federal funds rate confidence intervals are not strictly consistent with the projections because they are assessments of appropriate policy, not forecasts of the most likely outcomes. The federal funds rate confidence interval is truncated at zero, the bottom of the lowest target range ever adopted.
The market effect is a higher-for-longer front end. With the median 2026 fed funds rate at 4.1% and 2026 PCE inflation at 3.7%, the real policy rate remains modestly positive, keeping short-term Treasury yields elevated. The slower convergence of inflation to target—core PCE still at 2.5% in 2027—implies that the term premium on longer-dated Treasuries will persist unless the projected disinflation materializes. Compared with the ECB's September projections, which show euro area inflation running above target in 2026 and policy rates rising, the Fed's path is less aggressive but still restrictive, maintaining pressure on global duration.
Why it matters Funding a two-year food tax cut without deficit bonds while the defence target sits at 3.5% of GDP forces the cabinet to choose between the two at budget compilation, and the choice lands on JGB issuance — the same market the Bank of Japan is tightening into.
The cabinet approved a tax reform outline carrying a temporary two-year cut in the consumption tax rate on food and beverages, which Finance Minister Katayama said will be funded without special deficit bonds and settled during budget compilation. The change of behaviour is the funding rule, not the rate: the same outline leaves the defence spending target at 3.5% of GDP under consideration, so the two commitments compete for the same annual bond issuance Katayama says will be set at a level ensuring market confidence. With the Bank of Japan lifting the policy rate further and signalling more, a consumption tax cut widens the gap between what the budget collects and what it spends, and the JGB market prices that gap through the size of each issuance calendar rather than through the tax line itself.
Why it matters Finnish life and non-life insurers using the standard-formula solvency ratio as a de facto risk limit means their capital position is measured on a basis the supervisor has now called insufficient, so solvency ratios at those firms may need restating against risk-type limits.
Finland's Financial Supervisory Authority (Finanssivalvonta) said its ongoing supervision found shortcomings and development needs in how Finnish-licensed life and non-life insurance companies define and document their risk appetite, and it will target supervisory measures at the deficiencies on a risk-based basis. A preliminary review found that not all companies had defined or documented risk appetite by risk type as required, with several using the standard-formula solvency ratio or business indicators such as investment return or customer numbers as risk limits, which the authority said is insufficient. The channel runs through the solvency ratio those insurers already use as a de facto limit: if supervisors force risk appetite to be defined by risk type, the standard-formula ratio loses its role as the binding constraint and the limits that actually govern the bond portfolios of Finnish life insurers — the sector's largest asset class — have to be restated. The finding sits in a supervisory statement from a national authority that does not carry the weight of EIOPA guidance, so the operative text is the Finnish-language supervisory release rather than the English summary. What settles it is whether Finanssivalvonta converts the review into formal measures against named companies, and whether the risk-appetite definitions it demands appear in the next round of solvency reporting.
Why it matters Sri Lanka's conference makes reserve adequacy a function of short-term external liabilities and debt-service requirements rather than months of imports, the framework frontier sovereigns will be judged against when they next tap external markets.
At the Central Bank of Sri Lanka's inaugural Reserve Management Conference 2026 in Colombo, a keynote speaker described foreign reserves as a country's first line of defence against external shocks, using Sri Lanka's 2022 crisis as the case where inadequate buffers constrained imports, complicated debt servicing and fuelled inflation. The speech rejected judging adequacy by months of imports alone, arguing short-term external liabilities, debt-service requirements and capital-flow volatility must be weighed together, and noted renewed central bank interest in gold as a store of value carrying no sovereign credit risk. For a sovereign whose 2022 restructuring set the template for the frontier complex, the operative channel is the buffer itself: reserves accumulated in calm periods are drawn down fast in shocks, and the pace of that drawdown sets how long a country can service external debt before an IMF programme becomes the only buyer. The argument sits in the conference keynote rather than in any published reserve template, and no adequacy metric was quantified; the test is whether Sri Lanka's own reserve disclosures start reporting short-term external liabilities and debt-service requirements alongside the import-cover headline, and whether gold's share of the published composition rises from its current level.
Why it matters If household expectations are a direct input into policy analysis, then mortgage repricing feeding into consumption with long and uneven lags means the transmission of any rate path runs through household balance sheets on a schedule the ECB itself cannot pin down.
ECB Vice-President Boris Vujčić said in Berlin on 1 September 2026 that household expectations surveys have become a direct input into monetary policy analysis, because households form expectations with selective attention, incomplete information and beliefs dispersed by income, wealth, housing, financial literacy and trust in institutions. ECB Consumer Expectations Survey evidence he cited shows geopolitical risk can significantly worsen euro-area household sentiment and spending intentions, and that perceived macroeconomic uncertainty persistently reduces spending, with mortgage repricing feeding into consumption with long and uneven lags. The channel to the curve runs through the resets: if repricing lags differ by contract type and country, the pass-through from the ECB's September hike to consumption is slower and more uneven than a single aggregate elasticity implies, which changes how much further tightening the Council reads as necessary to move demand. The material is the Berlin speech itself, and the settling point is the next Consumer Expectations Survey release: watch whether the share of households reporting a mortgage reset in the past twelve months rises, and whether longer-term expectations stay centred on the inflation target while short-term ones move.
Also today
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The Securities and Exchange Commission proposed to rescind the shareholder-proposal rule under the Securities Exchange Act of 1934, which it says exceeds the scope of the Commission's statutory authority and intrudes into matters of state law. The proposal also includes reforms to the proxy solicitation process. Removing the federal framework for shareholder proposals at US-listed companies shifts the question of who may put a resolution on a proxy ballot to state corporate law and to each company's charter, so the cost of the governance channel — the expense of a contested solicitation and the terms on which issuers can exclude a proposal — moves from a uniform federal rule to a state-by-state patchwork. The proposal is buried in the SEC's own rulemaking release rather than in the market-facing headlines that carried the proxy-solicitation reforms, and the two halves of the package are being read as one. What settles it is the comment period and the adopting release: whether the rescission is finalised as proposed, and whether the proxy-solicitation reforms are adopted in the same release or split off.
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In a speech on Japan's economy and monetary policy, the speaker said the US economy has grown moderately despite the wide-ranging tariffs imposed in April 2025 by the Trump administration, with the actual impact limited, and that US employment slowed in 2025 but is heading toward improvement in 2026. The Federal Reserve cut rates in September, October and December 2025, but FOMC projections shifted from suggesting further cuts at the start of 2026 to potential rate hikes from mid-2026, while the speaker described a US "north wind" policy of pressure over persuasion from the start of 2025 as a negative for growth. The channel is the FOMC's own projection path: a shift from cuts at the start of 2026 to hikes from mid-2026 reprices the front end of the Treasury curve and the dollar leg of every carry position, and the speaker's read that the April 2025 tariffs did limited damage is what allows that shift to stand. The material sits in a BIS speech on Japan rather than in the FOMC minutes or the Summary of Economic Projections, so the projection shift is being read second-hand. What settles it is the next FOMC statement and the updated dot plot: whether the mid-2026 hike language survives into the projections themselves, and whether the tariff impact is still described as limited once the 2025 employment slowdown is revised.
Deep dives
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The Bermuda Monetary Authority proposes a phased resolution regime for commercial insurers, beginning with three foundational elements: designating itself as Resolution Authority, defining five resolution objectives, and scoping the regime to domestic insurers and BMA-supervised IAIGs. The framework would be transposed into law via amendments to the BMA Act 1969 and the Insurance Act 1978, with consultation comments due by 15 December 2026.
The BMA argues that co-locating supervisory and resolution decision-making within the authority enables coordinated, coherent and timelier decision-making, and that building on existing structures ensures cost efficiency and avoids a separate body potentially requiring additional industry funding. It also assumes resolution requirements can be integrated into existing supervisory and enforcement frameworks, minimising disruption, and that not all insurers subject to the regime will necessarily require a resolution plan. The paper draws on the FSB Key Attributes, IAIS ICPs and ComFrame, and other jurisdictions' experience, applying the IAIS proportionality principle and a risk-based approach.
Counterpoints include a potential conflict of interest between the BMA's supervisory and resolution roles, to be mitigated by operational separation, distinct staffing, dedicated reporting lines and periodic quality assurance reviews. The BMA also acknowledges that an overly rigid or narrowly defined scope could create legal and financial implications, and that certain elements of a resolution framework may be irrelevant or disproportionate for certain groups of entities. Resolution powers, tools, resolution planning aspects, cross-border cooperation and safeguards fall outside the scope of this consultation and will be addressed in future phases.
The proposed scope would extend the BMA's crisis-management powers over the commercial insurer classes and BMA-supervised IAIGs, with resolution planning criteria based on nature, scale, complexity, substitutability, cross-border operations and interconnectedness. For professional investors, the mechanism is that the BMA's designation as Resolution Authority, enacted via amendment to the BMA Act 1969, and the scoping of the regime via amendment to the Insurance Act 1978, would give the authority a formal mandate to intervene in the failure of large commercial insurers, potentially affecting recovery and resolution planning requirements and the cost of capital for affected entities.
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The ECB wage tracker puts negotiated wage growth at 2.7% in the first quarter of 2027 and 2.8% in the second quarter, a modest step up from the 2026 profile, according to the Banco de España's reading of the indicator. The comparison base is the weak one: with one-off payments smoothed, the tracker averages 2.2% in 2026, and the unsmoothed variant moderated to 2.6% from 3% in 2025. That 2026 dip is largely mechanical — one-off payments made in the second half of 2024 were not repeated, and their drag dissipates over the course of 2026. Strip one-off payments out entirely and the 2026 average is 2.6%, so the underlying negotiated trend is steadier than the headline path suggests. The tracker is built from a granular database of active collective bargaining agreements in nine euro area countries, aggregated first to country level using employee coverage and then to the euro area with time-varying weights based on total compensation of employees. The forward-looking quarters rest on thin coverage: 32.5% of employees for the first quarter of 2027 and 25.1% for the second, against 46.9% for 2026 as a whole. The authors are explicit that the forward-looking component is not a forecast — it only captures information currently available for active agreements — and that the series is subject to revision, particularly at the turn of the year when many agreements are signed or renewed in the first quarter in some countries. They also warn that the tracker does not reproduce the indicator of negotiated wage growth precisely, so deviations are to be expected over time. Coverage is expected to rise steadily as more agreements are signed, and the forward horizon extends to the third quarter of 2027 in the November 2026 release and to full-year 2027 in December. The policy-relevant cross-check is broader compensation: the September 2026 ECB staff projection has compensation per employee growing 3.3% in 2026, above the negotiated-wage signal. For the rate path, the mechanism runs through the ECB's wage-pressure assessment: a tracker settling near the high twos into 2027, with the 2026 softness explained by a fading one-off effect rather than by weaker bargaining, keeps services inflation pressure in the projection exercise that follows the September 2026 hike. The revision risk is concentrated in the first quarter, when the large national agreements are renewed and coverage for the forward quarters fills in.
- ECB wage tracker excluding one-off payments 2.6%
- Compensation per employee, yearly growth 3.3%
- ECB wage tracker, headline indicator 2.3%
- ECB wage tracker with unsmoothed one-off payments 2.3%
- ECB wage tracker excluding one-off payments 2.2%
- Employee coverage, ECB wage tracker 51.1%
In brief
Rates & Bonds 20 items
Central banks and statistical offices across Europe, Asia and Africa converge on easing price pressures and shifting policy: Italy's CPI came in at 3.3% year on year, Saudi Arabia's at 1.8%, and the CBR reported Russian consumer price growth slowing in August as petrol rose much less than in July and diesel became cheaper. The BIS put its policy interest rate at 2.25%, the Central Bank of Armenia changed its policy rate by 0.25pp, and the Bundesbank set its coupon at 2.9% while the SNB's stood at 2.93%. Eurostat's hourly labour costs rose 3.1% year on year and industrial production moved −0.1% month on month, against a Central Bank of Ireland underlying budget deficit of €7.2bn for 2025. The RBI's switch auction was sized at ₹30,000 crore and its VRRR notified amount at ₹250,000 crore, with Angola's coupon rate at 17% and the ECB's moratorium take-up rate at 44%.
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Commodities & Energy 1 item
A single release stands alone: the U.S. Department of Agriculture's American Biofuels Trade Outlook, published on 16 September 2026, builds on record 2025 US ethanol export performance and aims to remove restrictions on American biofuels.
FX & Emerging Markets 10 items
Emerging-market central banks and statistical agencies reported a mixed picture: Kazakhstan's industrial production rose 102.8% year on year and Albania's 2.6% in the second quarter, while Pakistan's LSMI quantum index stood at 119.13 in July. The Bank of Jamaica offered $40m in FX intervention on 17 September, Albania's private sector credit growth reached 14.3% year on year, and the NBK's inflation target is 5%. The BIS recorded real GDP growth of 6.4% and Ecuador's central bank forecast 2.7% for 2026, as an IMF mission led by Alexander Tiemann opened talks with Armenia's central bank on 16 September.
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Regulation & Structure 25 items
Supervisors on four continents tightened and clarified their rulebooks: Montenegro's central bank adopted a package of secondary legislation aligning credit-institution regulation with the EU acquis and EBA standards, Estonia's Finantsinspektsioon issued a precept to payment institution Wallester AS over management, control and client-asset safeguarding deficiencies, and Luxembourg's CSSF reminded entities that incidents must be notified under DORA-related circulars. Penalties and thresholds featured too, with Poland's financial supervisor imposing a fine of PLN 250k over 2022 annual and first-half 2023 reports, Finland's authority setting an NPV change threshold for default identification of 1%, and the SEC ordering disgorgement of $98.75k on 15 September. The SEC also set an answer deadline of 10 days and noted a Kimball stock price increase of 84.35% on the announcement day in March 2023, while the Federal Register reported total whistleblower award payments of $395m. Ghana's SEC set a dividend account opening deadline of 7 days, and South Africa's reserve bank put the cash share of consumer transactions by volume at 56% in 2024.
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No direct market impact 7 items
A handful of releases carry no direct market signal: the Central Bank of Belize reported total assets of BZD 2.26bn as of 30 June 2026, the CBR counted 61 companies equity crowdfunding issuers, and the Central Bank of West African States approved the Business APIs of participants in UEMOA's Interoperable Instant Payment System. Qatar Financial Centre Authority recorded GDP growth of 2.2% for 2024, Statistics Netherlands noted the tax burden on households has fallen by roughly a fifth since 2011, and the Federal Register allotted 10 minutes per testimony for 2 December 2026.