At 12:00 a.m. Beijing time on June 18, the Federal Reserve’s Federal Open Market Committee (FOMC) decided, with a unanimous 12-0 vote, to keep the target range for the federal funds rate unchanged at 3.50% to 3.75%. This was the Fed’s fourth consecutive hold following the completion of three consecutive rate cuts in December 2025. The rate decision itself was in line with market expectations—prior to the announcement, the interest rate futures market priced in a 99.6% probability of no change. However, what truly caught the market off guard was the dot plot and the Economic Projections Summary (SEP) released alongside the decision. Of the 18 officials submitting forecasts, 9 expected at least one more rate hike in 2026, 8 expected no change, and only 1 expected a rate cut. The median federal funds rate for end-2026 was raised from 3.4% in March to 3.8%. Meanwhile, the Fed sharply raised its 2026 PCE inflation expectation from 2.7% in March to 3.6%, and raised core PCE from 2.7% to 3.3%. Fighting inflation has once again become the main policy theme for the Fed.

This was the first FOMC meeting since Kevin Woss took office as Chair of the Federal Reserve. From the length of the statement to participation in the dot plot, from the abandonment of forward guidance to the establishment of five working groups, Woss’s debut revealed a style that clearly differed from that of his predecessor at every turn. The market quickly priced it as “hawkish and on hold”—U.S. stocks turned from gains to losses, Treasury yields jumped higher, the U.S. dollar strengthened, and gold and