BlockBeats report: On June 18, early this morning, the Federal Reserve held its first FOMC meeting since Wessel took office, as expected, maintaining the target range for the federal funds rate at 3.50% to 3.75%. The decision was unanimously approved by a 12-0 vote. What truly surprised the market was the dot plot: among the 18 officials who submitted projections, nine anticipated at least one more rate hike this year, eight expected rates to remain unchanged, and one forecast a cut. The median forecast for the federal funds rate at the end of 2026 was raised from 3.4% in March to 3.8%. Meanwhile, the Fed significantly revised up its PCE inflation forecast for this year to 3.6%, and core PCE to 3.3%, signaling that combating inflation has once again become the primary policy focus. Market pricing quickly turned hawkish; before the meeting, traders priced in about a 60% chance of a rate hike this year, but after the announcement, the probability of at least one hike this year rose to over 80%.
The core message Wash conveyed at the press conference was equally cautious—provide less forward guidance and rely more on actual data. He explicitly stated that he did not submit a dot plot forecast and said that traditional forward guidance is inappropriate under current conditions. Wash repeatedly emphasized that the FOMC’s commitment to returning to the 2% inflation target is “clear and consistent,” and noted that only one policy proposal was on the table at this meeting, with no discussion of alternatives. He also announced the establishment of five working groups to review the Fed’s communication, balance sheet, data sources, productivity and employment, and inflation framework, suggesting that under Wash’s leadership, the Fed may become more concise and make fewer commitments, but take a firmer stance on inflation.
The market reaction reflected a typical "hawkish hold": U.S. equities turned from gains to losses, with the S&P 500 closing down 1.2%, the Nasdaq down 1.3%, and the Dow Jones falling approximately 507 points. The two-year U.S. Treasury yield rose sharply, signaling rising expectations for rate hikes this year. The dollar strengthened in tandem, pushing the DXY to a multi-month high, while gold came under pressure due to rising real yields and a stronger dollar. Among risk assets, Bitcoin had already declined to around $65,500 ahead of the meeting; after the announcement, sentiment across crypto markets remained pressured, briefly dipping below $64,000. If the Fed reopens the door to rate hikes, liquidity expectations will tighten, leading to a repricing of overvalued tech stocks, crypto assets, and gold.