Fed holds rates at 3.5%-3.75% with hawkish tilt
The Federal Reserve held interest rates steady at 3.5%-3.75% while signaling potential hikes ahead. The median 2026 funds rate projection rose to 3.8% from 3.4%.
The inflation upgrade, with headline PCE now seen at 3.6% for 2026, reinforces the case for potential tightening. The balance sheet remains unchanged for now.
The removal of forward guidance introduces greater uncertainty into rate-sensitive assets. Any communication overhaul, including a potential scrapping of the dot plot, would further complicate forward pricing of Fed policy.