The Fed unexpectedly shifted to a more aggressive tightening stance, signaling
officials’ growing concern that inflation may remain elevated. The dot plot
shows nine officials now expect a rate hike this year and six project two or
more 25bp increases, versus March when no policymaker forecast a hike and the
committee expected a 2026 cut. Fed officials reiterated their determination to
combat inflation. Deutsche Bank chief US economist Matthew Luzzetti said the
risk the Fed will need to raise rates has clearly risen. Markets reacted:
equities fell sharply and government bond yields rose after the Fed statement
and subsequent remarks.
