Fed rate decision highlights: dot plot divergence grows, policy language adjusted

Below are the key points from the Fed's rate decision on Wednesday:

Benchmark rate unchanged

The FOMC voted unanimously to hold the benchmark rate steady in the 3.5%-3.75% target range.

Dot plot shows divergence on rate outlook

The "dot plot" reflecting rate projections shows divergence among officials on whether to hike before end of 2026. 9 of 18 officials project a hike, with the median rate projection rising to 3.75% from 3.4% in March; the median also shows the rate falling to 3.6% in 2027.

One Fed official did not submit any rate projection; another did not provide a 2028 projection.

Inflation expectations raised, growth expectations lowered

Median Fed official projections show core inflation at 3.3% by end of 2026, up from 2.7% in March; GDP growth seen at 2.2%, down from 2.4% previously.

Policy statement streamlined

The Fed streamlined its policy statement, removing language about possible further rate adjustments, and stating "the Committee will achieve price stability."

The Fed said, "Economic activity continues to expand at a solid pace amid high uncertainty due in part to the Middle East conflict," and "productivity growth and capital investment are strong."

The Fed also said job gains "remain in line with labor force growth, and the unemployment rate has moved little"; inflation remains elevated, "partly reflecting supply shocks that have pushed up prices in sectors such as energy."