Overview
- The Fed left its policy rate at 3.50%–3.75% and at its June 18 meeting raised the year-end 2026 inflation forecast to 3.6% while a dot plot showed eight of 18 FOMC members expect rate increases this year.
- Kevin Warsh removed forward guidance, declined to take part in the dot plot and shortened the policy statement to signal a shift toward flexibility and decisions driven by incoming data.
- Warsh announced five external working groups of independent experts that will begin work in the coming weeks and deliver interim findings by autumn and major conclusions by year-end to review communications, the Fed’s balance sheet, data, technology effects and the inflation framework.
- Analysts warn that with fewer explicit Fed signals, markets and Banco de México will have to rely more on economic releases such as inflation, jobs and growth and on the changing U.S.-Mexico rate differential when pricing risk and capital flows.
- Observers said holding rates despite pressure from President Trump was intended to preserve Fed independence while keeping the option to tighten later if data and higher inflation expectations warrant it.