The Federal Reserve held its benchmark interest rate steady at 3.50%-3.75% at its June meeting. But the economic outlook has changed significantly.
Nine of 19 Federal Reserve officials now project at least one rate hike before the end of 2026. Six anticipate multiple increases. This marks a sharp reversal from three months ago, when zero officials held that view.
Market expectations reflect this shift. Traders are pricing in a high probability of a quarter-point hike before December, a view solidified after inflation hit 4.2% in May-a three-year peak.
The updated economic projections now show median inflation running at 3.6% for the year. This rapid pivot from a focus on potential cuts to projecting hikes represents a notable change in the policy landscape.