European Commission President Von der Leyen proposed limiting entry of Ukrainian refugees into the EU.

Economics professor Phil Powell said he expects the Fed to hold rates at this meeting. He said markets had feared higher inf prior to a Washington‑Tehran peace deal after oil surged and inf topped 4%, making a near‑term Fed hike more likely than a cut. Powell added an Iran peace agreement would be a sizeable disinflationary shock—oil could fall more than expected and lower the odds of near‑term hikes. He noted this was the first rate decision under the new Fed chair; while markets may view the new chair as more cut‑friendly than his predecessor, Powell said that has not proven true. On cuts, he said rate reductions are unlikely before year‑end because inf must fall first.

Nearly half of Federal Reserve policymakers no longer believe that holding borrowing costs steady would be sufficient to bring inflation back to 2% if oil prices spike after a war involving Iran. The Fed's latest dot plot shows views on the rate path shifting from how long to hold rates before cuts to growing concern about the need for additional hikes; some officials now expect rate increases. Wednesday's projections revised inflation sharply higher since March: median PCE YoY is now seen at 3.6% by year-end (March: 2.7%), median core PCE YoY at 3.3% (March: 2.7%). Median year-end unemployment is 4.3% — matching May's reading and below March's 4.4% — indicating policymakers increasingly see the labor market as not weakening and reducing the case for rate cuts.