The Federal Open Market Committee (FOMC) on Wednesday unanimously voted to leave the federal funds rate unchanged at 3.50% to 3.75%, as widely expected. The FOMC released a revamped statement with significant changes from those under former chief Jerome Powell’s leadership, resulting in a much shorter and pared down version that dropped forward guidance and ended with a simple assertion: the FOMC "will deliver price stability.
Separately, the FOMC’s updated Summary of Economic Projections (SEP), or dot plot, projected a federal funds rate at 3.8% at the end of 2026, revised upward from 3.4% in the previous dot plot in March.
The hawkish tilt to the dot plot was notable, with 9 of the 18 FOMC participants penciling in a rate hike this year and the overall projection switching to one 25 basis point rate hike from at least two 25 basis point rate cuts. Investors across asset classes reacted the hawkishness, with Wall Street sliding, the dollar jumping, and Treasury yields soaring.