Overview
- The Federal Open Market Committee unanimously left the policy rate at 3.50–3.75% and, in its updated projections, put the median year-end federal funds rate at 3.8%, which implies one 25 basis-point hike from current levels.
- Chair Wausch abolished formal forward guidance and declined to publish her own policy projection so the Fed will make decisions on a meeting-by-meeting basis.
- Wausch announced five Fed task forces covering external communications, the balance sheet, data use, AI and productivity and employment, and the inflation framework to pursue institutional reforms while keeping the 2% inflation target.
- Markets reacted quickly with dollar strength and yen weakness, which pushed the yen into the high-160s per dollar and revived concerns that Japanese authorities could intervene to support the currency.
- The Fed cited stronger inflation and higher oil prices tied to Middle East tensions as upside risks, and it said future moves will depend on incoming data and geopolitical developments that could affect prices and global rate differentials.