Fed Keeps Rates Unchanged as Inflation Outlook Edges Higher; Crypto Slides
The Federal Reserve left interest rates unchanged at its June 17 meeting, holding the federal funds rate in a 3.5% to 3.75% range in a unanimous decision. Markets focused less on the rate hold and more on the Fed’s updated projections, which lifted the 2026 personal consumption expenditures (PCE) inflation forecast to 3.6%. Core inflation for 2026 was pegged at 3.3%, while the median policy path now implies a 3.8% rate by year-end.
Chair Kevin Warsh, who took office on May 22, struck a firm tone in his first meeting at the helm. He centered the Fed's message on "price stability," offering little of the growth-friendly framing some investors had expected.
The stance stood out because incoming data ahead of the meeting had pointed to moderating inflation, with recent consumer price readings cooling to roughly 0% to 1%. Under a different policy backdrop, that kind of print could have supported a case for easing. The Fed's projections did not move in that direction. Officials continue to see inflation risks tied to energy prices and supply-chain disruptions, even as near-term readings have softened.
The Fed forecast real GDP growth of 2.2% for 2026 and expects the unemployment rate to stabilize around 4.3%.
Crypto markets sold off after the announcement. Bitcoin fell about 2% to 4%, trading between $63,850 and $64,400. Ethereum declined roughly 2.5% to 3.5% over the same window.
Warsh's personal holdings in digital assets had drawn attention when his appointment was announced, fueling speculation he might adopt a more crypto-friendly posture. His first meeting as chair suggested otherwise, signaling a clear separation between his personal portfolio and the Fed's institutional mandate.
Investors are now watching whether the recent 0% to 1% inflation readings represent a durable floor or a short-lived dip. If inflation remains near current levels, pressure to keep rates this elevated could ease. The Fed's revised 3.6% full-year PCE inflation forecast indicates the committee is not counting on that softness to last.
Key watch points in the near term include upcoming PCE inflation prints over the next two months relative to the Fed's 3.6% projection, and whether Warsh signals any flexibility in public remarks ahead of the next FOMC meeting.
