The Federal Reserve's June FOMC meeting on the 17th delivered exactly what markets expected on rates — and nothing they expected on communication. New Chair Kevin Warsh presided over his first policy decision, keeping the federal funds rate unchanged at 3.50%-3.75% for the fourth straight meeting. The vote was unanimous, 12-0. But the real shock came from the updated dot plot.
Dot Plot Turns Hawkish: 9 Officials See a Hike This Year
The median year-end 2026 rate projection jumped to 3.8%, up from 3.4% in March. Among 18 officials who submitted projections, 9 expect at least one rate increase this year, 6 expect more than one, and only one still sees a cut. Warsh himself did not submit a projection. The committee also trimmed its 2026 GDP growth forecast to 2.2% from 2.4% and pushed back the timeline for inflation reaching the 2% target to 2028. Officials cited persistent price pressures fueled by this spring's energy spike linked to the Middle East conflict as the main driver.
Warsh Abandons Forward Guidance, Markets React Instantly
In his first press conference as chair, Warsh said the Fed would no longer signal its next move in advance, calling the old approach poorly suited to the current moment. He even hinted that the dot plot itself could eventually be revised. The lack of guidance caught traders off guard. Within minutes, roughly $2 trillion was wiped out across stocks, gold, silver, and Bitcoin. The S&P 500 and Nasdaq each fell about 1%, the Dow dropped roughly 500 points, and two-year Treasury yields jumped as markets priced in nearly 80% odds of a 2026 rate hike.
Bitcoin Slips Below $64K, Volatility Likely to Rise
Bitcoin felt the heat, sliding to around $63,000 as traders unwound rate-cut bets. With the Fed offering less directional clarity, crypto markets face higher volatility ahead. Bitcoin's next major move will likely depend on incoming inflation data and the Fed's July 28-29 meeting. Warsh also announced five new task forces to review how the Fed communicates, manages its balance sheet, and uses economic data — though details on timing and scope remain scarce.