Overview
- The Federal Open Market Committee met on Wednesday and left the federal funds rate at 3.50%–3.75%, with roughly half of voting officials signaling support for at least one hike later in 2026.
- Chair Kevin Warsh removed routine forward guidance and declined to publish his own rate projections, saying the Fed will react to incoming economic data rather than offer a preset path.
- Markets responded by pushing up Treasury yields and shifting Fed-hike probabilities earlier in the calendar, with short-term yields rising and CME FedWatch showing much higher odds for late-2026 moves.
- U.S. inflation has picked up this spring — May CPI ran about 4.2% year-over-year — a rise market participants link in part to higher oil costs from U.S.–Iran tensions, and traders are now focused on the May PCE inflation report as the next key test.
- Commentators warn that rolling back disclosure raises risks of insider advantage while higher yields will increase borrowing costs for mortgages and consumer loans even as some firms, like Costco, may prove resilient to tighter policy.