The Federal Reserve issued its awaited decision regarding monetary policy (today, Wednesday, June 17, 2026), and the details are as follows:
1. Interest Rate Decision
The US Federal Reserve decided to keep interest rates unchanged at 3.75%, which aligns with most market expectations and previous analyses.
2. The Surprise in the Dot Plot
Despite holding interest rates steady, the markets received a hawkish shock from the tone of the statement and future member expectations:
Interest rate hike probability: The dot plot showed a clear shift towards a more aggressive policy; half of the policymakers (9 out of 18 members) see the need to raise the interest rate by an additional quarter point before the end of 2026.
Inflation levels: The Fed indicated the possibility of elevated inflation levels continuing through 2026, with no expectation of returning to the target (2%) before 2028.
The new Fed chair's fingerprint is missing: This is the first meeting under the leadership of the new Fed chair "Kevin Warsh", who notably omitted many previous hints indicating "quantitative easing" or interest rate cuts, adopting a cautious and stringent tone towards inflation.
3. Immediate market reactions
Gold: Gold prices plummeted sharply following the hawkish forecasts, with spot contracts dropping over 0.5%, heading towards levels around $4,306 per ounce.
U.S. Dollar: The dollar index jumped by about 0.48% to reach 99.75 points.
Bonds: Yields on short-term U.S. Treasury bonds (two-year) rose by 9 basis points to 4.134%.
