Fed Leaves Rates Unchanged; Raises Rate Projections For 2026 And 2027

On June 18, 2025, Fed released its FOMC Statement. The central bank decided to maintain the target range for the federal funds rate at 4.25% – 4.50%, in line with analyst estimates.

Fed noted that unemployment rate remained low, while inflation was somewhat elevated. According to Fed, economic activity continues to expand at a solid pace, while uncertainty about the economic outlook has diminished.

Fed also released its updated economic projections. GDP growth projection for 2025 was cut from 1.7% to 1.4%, while unemployment rate projection was raised from 4.4% to 4.5%.

PCE inflation projection was raised from 2.7% to 3.0% for 2025 and from 2.2% to 2.4% for 2026.

Higher PCE inflation projection led to higher federal funds rate projections for the upcoming years. This year’s federal funds rate projection remained unchanged at 3.9%, but next year’s projection was changed from 3.4% to 3.6%.

U.S. Dollar Index settled near the 98.70 level as traders reacted to Fed decision. Higher federal funds rate projections for 2026 and 2027 may provide some support to the American currency.

Gold remained stuck below the psychologically important $3400 level after the release of Fed decision.

SP500 pulled back towards the 6000 level after an unsuccessful attempt to settle above 6025.

Traders should note that markets will remain volatile ahead of Powell’s press conference, which starts soon.

For a look at all of today’s economic events, check out our economic calendar.