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The Federal Reserve's Federal Open Market Committee (FOMC) held the benchmark interest rate in the range of 3.5% to 3.75% following a unanimous vote.
According to the Federal Reserve's dot plot, 9 FOMC members foresee at least one rate increase this year, while 9 members see no moves or a rate cut.
The Federal Reserve significantly increased its forecast for headline PCE inflation for the current year to 3.6%, up from 2.7% in its March projection.
The Federal Reserve raised its forecast for core PCE inflation for the current year to 3.3%, a substantial increase from the 2.7% projected in March.
The Federal Reserve's policy statement concludes with the sentence, 'The committee will deliver price stability,' omitting a reference to its full employment mandate.
Diane Swonk of KPMG expects the Federal Reserve to implement two more interest rate hikes by the end of the year.
The Federal Reserve's dot plot projects one interest rate cut each in the years 2027 and 2028.
The Federal Reserve's policy statement was shortened to four paragraphs and no longer includes a 'balance of risks' assessment.
The Federal Reserve's 2026 dot plot only contained 18 submissions, leading to speculation that Fed Chair Kevin Walsh did not submit a projection.
Former Fed Vice Chair Rich Clarida stated that recent data indicates pressure in core inflation is more broadly based and not just a pass-through from energy prices.
Diane Swonk of KPMG identifies the core 'super services' component of inflation as being sticky, hot, and reaccelerating, moving beyond shocks from energy or tariffs.
Matt Lazzetti of Deutsche Bank highlighted that the Federal Reserve's median expectation for core PCE inflation in 2027 is 2.5%, indicating inflation will remain above the 2% target for over six years.