Federal Reserve Decision
The Federal Open Market Committee (FOMC) voted unanimously on Wednesday to maintain the federal funds rate in the target range of 5.25–5.50%, the highest level in 23 years. Chair Jerome Powell signalled that policymakers need greater confidence that inflation is sustainably moving toward the 2% target before cutting borrowing costs.
Key Takeaways
- Core PCE inflation remains at 2.8%, above the 2% target
- Labour market added 275,000 jobs last month, beating expectations
- Markets now price in only two rate cuts for 2026, down from four at the start of the year
"We are committed to returning inflation to 2%," Powell said at the post-meeting press conference. "We will keep policy restrictive for as long as it takes."
Market Reaction
Equity indices fell modestly following the statement, with the S&P 500 declining 0.4%. The 10-year Treasury yield rose 5 basis points to 4.35%, while the US dollar strengthened against major currencies.
Analysts at Goldman Sachs now forecast the first rate cut in September 2026, pushing back their earlier June projection.