Overview
- The FOMC kept the federal funds rate at 3.50%–3.75% in an 11–1 vote and said the economic impact of Middle East developments remains uncertain.
- Christopher Waller, who had pushed for cuts, now backs holding steady, warning that sustained high oil prices could bleed into core inflation.
- Waller said he does not see a need to consider hikes and could support cuts later this year if labor weakness deepens and inflation risks ease.
- Markets have sharply reduced odds of near-term easing, with CME FedWatch showing a strong chance of continued holds and a small probability of a hike priced in.
- Forecasts have split: J.P. Morgan’s Michael Feroli expects no cuts in 2026 and a first hike in 2027, while Fed Vice Chair Michelle Bowman says she has penciled in three cuts this year.