The Federal Reserve kept rates steady at 3.50%-3.75% and removed language on further hikes, lifting the dollar against the yen.
The Federal Reserve left interest rates unchanged at 3.50%-3.75% in Kevin Warsh’s first policy meeting as chair, aligning with market expectations. The USD/JPY pair climbed to 160.40 after the decision, erasing earlier losses near 160.12.
The Fed’s statement dropped its prior reference to “additional rate adjustments,” a shift interpreted as a move toward a more data-dependent approach. Policymakers also lowered their 2026 GDP growth forecast to 2.2% from 2.4%, while maintaining the longer-run estimate at 2%.
Markets reacted to the Fed’s cautious tone, with the dot plot showing division among officials over future moves. Chair Warsh emphasized inflation risks tied to oil prices and geopolitical tensions, signaling no immediate rate cuts.