Fed rate decision highlights: Dot plot split widens, policy statement turns neutral

Here are the key takeaways from the Fed's Wednesday rate decision:

Rates unchanged

The Federal Open Market Committee unanimously voted to keep the benchmark rate unchanged in the 3.5%-3.75% target range.

Dot plot shows a split on the policy path

The “dot plot” of rate forecasts showed a split among officials over whether to hike before the end of 2026. Nine of the 18 officials expect a hike, and the median rate forecast rose from 3.4% in March to 3.75%; the median forecast also shows rates falling to 3.6% in 2027.

One Fed official submitted no rate forecast, and another did not provide a 2028 rate forecast.

Inflation forecast raised, growth forecast cut

The median forecast from Fed officials shows core inflation at 3.3% by the end of 2026, above the 2.7% forecast in March; GDP growth is expected at 2.2%, down from the previous 2.4% forecast.

Policy statement trimmed

The Fed shortened its policy statement, removing wording about possible further rate adjustments and saying the committee “will achieve price stability.”

The Fed said economic activity continued to expand at a solid pace despite highly uncertain conditions stemming from factors including the conflict in the Middle East, while productivity growth and capital investment remained strong.

The Fed also said job growth kept pace with labor-force growth, the unemployment rate changed little, and inflation remained elevated, partly reflecting supply shocks that pushed up prices in sectors such as energy.