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FOMC Press Release 1⃣
The Fed kept rates unchanged. But the important thing is this: they removed the word “adjustments” and all the forward guidance language around it. That used to mean rate cuts.
The message is this:
April statement: The next move will most likely be a cut, but we will look at the data.
June statement: We are not giving a directional commitment right now; we will deliver price stability.
The easing bias has been removed. This was done to calm the bond vigilantes.
What the Fed is trying to say is this: We are keeping rates unchanged, but we are no longer leaving an open door for the market that the next move will be a cut. The economy is still solid, employment has not broken, inflation is above the 2% target, and we will deliver price stability.
I read this not as dovish, but as a neutral-hawkish communication reset.
SEP 2⃣
In March, the Fed was still saying that a rate-cut path could be possible later. In June, that path has been moved significantly higher. In other words, the removal of the easing bias in the statement has also been confirmed by the Dot Plot.
2026 Fed funds median: rate cut erased
2027 Fed funds median: easing cycle delayed
2028 Fed funds median: normalization slower
Longer run: neutral rate unchanged
In the June SEP, the 2026 federal funds median rose to 3.8%; in March, it was 3.4%. The 2027 median also rose from 3.1% to 3.6%. This shows that the Fed is giving a higher-for-longer message not only for 2026, but also for 2027. In the March SEP, the rate path was lower and left more visible room for easing in 2026-2027.
The important nuance here is this: the longer-run rate did not change. So the Fed is not saying, “the economy’s neutral rate has permanently moved higher.” It is saying more: “because of shocks and inflation risk, I need to keep the policy rate high for longer.”
The inflation side is much more hawkish.
The real hawkishness is here. Headline PCE for 2026 was raised from 2.7% to 3.6%. This already shows the energy/supply shock effect. But more importantly, Core PCE was also raised from 2.7% to 3.3%. So the Fed does not see this only as a temporary oil/energy-driven shock; it also sees a risk of spillover into core inflation.
That is why the June Dot Plot should not be read only as “rate cuts were delayed.” The more accurate reading is:
The Fed still believes inflation will come down, but it thinks that process will be slower and riskier.
The growth side has been weakened, but there is no recession signal. 2026 growth was lowered from 2.4% to 2.2%. This shows that the Middle East / energy / uncertainty shock is putting mild pressure on growth. But the growth forecast is still above 2%. So the Fed is not saying a recession is coming.
Unemployment is not giving the Fed an excuse to cut. The 2026 unemployment forecast was lowered from 4.4% to 4.3%. In other words, the Fed does not expect serious deterioration in the labor market.
In short, the June Dot Plot marked a shift from the “rate cuts are the base-case path” narrative to a narrative of patience, high rates, and a tighter stance if needed.
In the April statement, the sentence “The Committee will deliver price stability” was emphasized.
Now, more than the official text itself, Warsh’s press conference language is much more important.