Fed Rate Decision Highlights: Dot Plot Divergence Widens; Policy Statement Shifts to Neutral

Key takeaways from Wednesday's Fed rate decision:

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

The "dot plot" reflecting rate forecasts showed officials split on whether to hike by end-2026. Nine of 18 officials expect a hike; median rate forecast rose to 3.75% from 3.4% in March; median forecast also shows rate at 3.6% in 2027.

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

Fed officials' median forecasts: core inflation at 3.3% by end-2026, up from 2.7% in March; GDP growth at 2.2%, down from 2.4%.

The Fed streamlined the policy statement, removed language about possible further rate adjustments, and said "the Committee is committed to achieving price stability."

The Fed said, "Despite high uncertainty due to factors such as the Middle East conflict, economic activity continues to expand at a solid pace," and "productivity growth and capital investment are strong."

The Fed also noted employment growth "has kept pace with labor force growth, and the unemployment rate has changed little"; inflation remains elevated, "partly reflecting supply shocks that have driven up prices in energy and other sectors."