The Federal Open Market Committee voted unanimously on 17 June 2026 to leave its benchmark interest rate unchanged in a target range of 3.5%-3.75%, in the first policy decision issued under Chair Kevin Warsh. The updated Summary of Economic Projections showed the median year-end 2026 dot rising to 3.8%, up from 3.4% in the March projections, with nine of the eighteen participating officials expecting at least one rate hike this year, eight projecting no change, and one projecting a cut. Warsh did not contribute to the exercise. 'I did not submit a dot for me,' he told reporters, calling the practice 'not helpful in the conduct of policy' [Source: CNBC].
Alongside the rate projections, officials revised their 2026 inflation outlook sharply higher, raising the headline forecast to 3.6% and the core forecast to 3.3%, compared with 2.7% for both measures in March. The GDP growth projection was lowered to 2.2%, a reduction of 0.2 percentage points from March, while the unemployment projection was trimmed to 4.3%, down 0.1 percentage points. Warsh also announced that the FOMC had released a noticeably shorter policy statement that removed outdated language and dispensed with forward guidance, and outlined plans to form five task forces to review the Fed's monetary policy operations, communications, data sources, productivity and labour market, and the causes of inflation.
US Treasury yields jumped following the decision as traders adjusted expectations for potential rate hikes later in the year and fully priced in higher borrowing costs in 2026. Short-term yields led the move higher. Gold prices fell 0.8%, erasing earlier gains. The S&P 500 was down 0.1%, paring losses after falling as much as 0.88% shortly after the rate decision was announced, while the Dow Jones Industrial Average and the Nasdaq Composite turned higher and were each up less than 0.1%, erasing earlier losses. Ahead of the meeting, CME Group's FedWatch gauge had shown the market did not anticipate any cuts in 2026 and had priced in a quarter-point hike by year-end.
The June decision continues a pattern of restraint that has held throughout 2026. The hold follows decisions to leave rates steady in January, March, and April, after three successive 25-basis-point cuts in September, October, and December 2025, making December 2025 the date of the Fed's last rate reduction. Warsh was confirmed by the Senate on 13 May 2026 and sworn in as the 17th Fed Chair on 22 May, having previously served as a Fed Governor from 2006 to 2011. On the inflation backdrop, the May Consumer Price Index registered a 4.2% annual rate, with the core measure at 2.9%, and inflation has remained above the Fed's 2% target for five years. Nonfarm payrolls rose by 172,000 in May while the unemployment rate held at 4.3% [Source: CNBC].
Sources: Bloomberg, CNBC, Fox Business, BBC, CBS News, CNN Business