Fed Leaves Rates Unchanged, Dot Plot Points to Potential 2026 Path Shift

Huoxing Finance reported that on June 18, the Federal Reserve held its first FOMC meeting since Waugh's appointment and, as widely expected, kept the federal funds rate target range unchanged at 3.50% to 3.75%. The decision passed unanimously in a 12–0 vote. Markets focused on the updated dot plot. Of the 18 officials who submitted projections, nine penciled in at least one additional rate hike this year, eight projected no change, and one anticipated a cut. The median projection for the federal funds rate at end-2026 was lifted to 3.8% from 3.4% in March. The Fed also marked up its inflation outlook, raising its 2024 PCE inflation forecast to 3.6% and core PCE to 3.3%, underscoring a renewed emphasis on bringing inflation under control. Rates markets quickly repriced in a more hawkish direction: traders had been assigning roughly a 60% chance of a hike this year before the meeting, rising to above 80% after the decision. At his press conference, Waugh struck a cautious tone, offering less forward guidance and placing greater weight on incoming data. He said he did not submit a dot plot projection and argued that traditional forward guidance is not appropriate in the current environment. Waugh reiterated that the FOMC's commitment to returning inflation to the 2% target is "clear and consistent", adding that only one policy proposal was considered at this meeting, with no alternatives discussed. He also announced five working groups to review the Fed's communications approach, balance sheet, data sources, productivity and employment, and the inflation framework—signaling that under Waugh, the Fed may communicate more tersely and make fewer commitments while maintaining a tougher stance on inflation. Markets reacted in a classic "hawkish hold" pattern. U.S. equities reversed from gains to losses, with the S&P 500 down 1.2%, the Nasdaq down 1.3%, and the Dow falling about 507 points. The two-year Treasury yield jumped as expectations for a rate hike this year increased. The dollar strengthened, lifting the DXY to multi-month highs, while gold came under pressure amid higher real yields and a firmer greenback. In risk assets, Bitcoin had already slipped to around $65,500 ahead of the meeting. After the announcement, crypto sentiment remained heavy, briefly pushing Bitcoin below $64,000. If the Fed keeps the door open to further hikes, tighter liquidity expectations could drive a repricing across high-valuation tech stocks, crypto assets, and gold.