Fed Rate Decision Highlights: Rate Outlook Divergence Grows, Statement Tweaked

Here are the highlights from the Fed's Wednesday rate decision:

Benchmark Rate Unchanged

The FOMC voted unanimously to keep the benchmark rate at 3.5%-3.75%.

Dot Plot Shows Policy Path Divergence

The "dot plot" reflecting rate projections showed division among officials on whether to hike by end-2026. Nine of 18 officials expected a hike; the median rate forecast rose from 3.4% in March to 3.75%; the median also showed rates falling to 3.6% in 2027.

One Fed official did not submit any rate forecast; another did not provide a 2028 forecast.

Inflation and Growth Forecasts Adjusted

The median core inflation forecast for end-2026 was 3.3%, up from 2.7% in March; GDP growth forecast was 2.2%, down from 2.4%.

Policy Statement More Cautious

The Fed streamlined the policy statement, removing language about possible further rate adjustments and stating "the Committee will achieve price stability."

The Fed said economic activity is expanding at a solid pace despite high uncertainty from Middle East conflict, with strong productivity growth and capital investment.

The Fed also said employment growth keeps pace with labor force growth, unemployment little changed; inflation remains elevated, partly reflecting supply shocks boosting prices in energy and other sectors.