Hua Xu Makes His Debut as Chairman of the Fed: The Fed Keeps Interest Rates Unchanged, Significantly Upgrades the Inflation Projections in the Dot Plot, and Fully Raises the Interest-Rate Hike Path

According to the latest official announcement from the Federal Reserve (Fed), the FOMC announced at 2:00 PM Eastern Time on the 17th that the benchmark interest rate would remain unchanged within the range of 3.50% to 3.75%. In the first decision-making meeting under new Chair Kevin Warsh, the latest dot plot was significantly revised upward, raising the inflation expectation for 2026 to 3.6%, and hinting that the pace of future rate cuts will slow markedly, casting a "higher for longer" shock on global risk assets and the cryptocurrency market.
(Background: Fed mouthpiece comments on Waller’s first appearance since taking office: New Fed Chair needs to prove that "shutting up" is more powerful than "speaking")
(Additional background: U.S.-Iran ceasefire memorandum finalized: Brent crude oil drops below $85, Fed rate cut expectations heat up)

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• Inflation expectations sharply revised upward! PCE surges to 3.6%
• Dot plot hawkish: "Higher for longer" interest rates become the norm
• New Chair Warsh’s first move, policy shifts to neutral

The "super central bank week" that the global financial markets have been holding their breath for reaches its climax. The U.S. Federal Reserve (Fed) announced the latest Federal Open Market Committee (FOMC) decision at 2:00 PM Eastern Time on June 17, 2026. As widely expected, it kept the federal funds rate target range at 3.50% to 3.75%, marking several consecutive hold decisions this year.

This meeting was also the first appearance of new Chair Kevin Warsh, succeeding Jerome Powell. However, the accompanying Summary of Economic Projections (SEP) and dot plot sent a clear hawkish signal to the market.

Inflation expectations sharply revised upward! PCE surges to 3.6%

According to the latest median economic forecasts, Fed officials’ confidence in fighting inflation has been significantly impacted by recent geopolitical shocks (such as Middle East conflicts). Data shows that the projected annual growth rate of the Personal Consumption Expenditures (PCE) price index for 2026 was sharply revised upward from 2.7% in March to 3.6%, with core PCE also rising to 3.3%.

Although recent peace prospects between the U.S. and Iran have caused international oil prices to retreat, the lagging effects of inflation still make officials cautious. Regarding economic growth, the real GDP growth rate for 2026 was slightly revised downward to 2.2%, while the unemployment rate is expected to remain steady at 4.3%, indicating that the U.S. economy remains resilient and giving the Fed confidence to maintain high interest rates.

Dot plot hawkish: "Higher for longer" interest rates become the norm

For cryptocurrency and risk asset investors, the most concerning aspect is the change in the dot plot. A total of 18 committee members submitted forecasts, and the latest data shows that FOMC members’ expectations for the future path of the federal funds rate have moved upward across the board. The median rate forecast for the end of 2026 jumped from 3.4% to 3.8%, and for 2027, from 3.1% to 3.6%.

Even more noteworthy is the "long-term interest rate forecast," regarded as a neutral rate indicator, which has risen further to 3.1%. This implies that even if the rate hike cycle resumes in the future, the overall cost of capital will remain high in the long term, making the ultra-low interest rates of the past easing era unlikely to return.

New Chair Warsh’s first move, policy shifts to neutral

Faced with the severe pressure of inflation rebound, new Chair Kevin Warsh’s attitude at his first post-meeting press conference became a global focus. Market analysis indicates that the Fed has removed the previous language hinting at "additional adjustments" leaning toward easing in its statement, officially shifting its monetary policy stance to "more neutral" and cautious.

As the Fed re-prioritizes fighting inflation, U.S. stock markets remained on hold before the decision was announced, while bond yields fluctuated due to cooling expectations of rate cuts. For Bitcoin and the overall cryptocurrency market, which rely heavily on market liquidity, the environment of sharply reduced rate cut expectations and continued capital pressure suggests that short-term turbulence may intensify.