(Updates with the Summary of Economic Projections and comments from Oxford Economics.)
The Federal Reserve kept its monetary policy steady Wednesday, removing the so-called easing bias from its statement, while raising its interest rate expectations through 2028.
The central bank's Federal Open Market Committee maintained its interest rate at 3.50% to 3.75%, in line with Wall Street's expectations and marking its fourth consecutive pause.
Last year, the FOMC delivered three back-to-back 25-basis-point cuts amid concerns about the labor market.
The latest policy statement excluded language that suggested a lingering bias toward rate cuts.
June's decision and the accompanying statement had backing from all voters, according to the Fed.
Its April decision to hold rates drew opposition from then-Governor Stephen Miran, who favored a rate cut, while three other officials wanted the easing bias removed.
"Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East," the FOMC said Wednesday. "Job gains have kept pace with the workforce, and the unemployment rate has changed little."
The FOMC's latest Summary of Economic Projections, or SEP, showed the median federal funds rate at 3.8% at the end of 2026, up from 3.4% in March. The 2027 and 2028 outlooks were revised higher to 3.6% and 3.4%, respectively, from 3.1% previously projected for both years.
This was Kevin Warsh's first policy meeting as Fed chair, replacing Jerome Powell, who remains a Fed governor.
Warsh said at a post-meeting press conference that he didn't submit his rate forecast in the dot plot, which anonymously shows individual members' expectations regarding monetary policy, CNBC reported.
Policymakers raised their 2026 projections for headline and core inflation -- as measured by personal consumption expenditures -- to 3.6% and 3.3%, respectively, from the March estimates of 2.7% for both metrics.
Their 2027 figures for headline and core inflation increased to 2.3% and 2.5%, respectively, from 2.2%. Core inflation excludes the volatile food and energy components.
"In a dramatically slimmed-down communication from the (Fed), the key message was that roughly half the committee are now projecting a rate hike this year, reflecting persistent inflation concerns," Michael Pearce, chief US economist at Oxford Economics, said in remarks e-mailed to. "Warsh took an axe to the policy statement, which now offers next to no guidance beyond a factual summary of the economic situation."
The unemployment rate this year is seen at 4.3%, down from 4.4% previously expected, though the 2027 outlook was maintained at 4.3%, the SEP document showed.
"Inflation remains elevated relative to the committee's 2% goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy," the Fed said. "The committee will deliver price stability."
Earlier this month, official data showed US annual inflation accelerated to the highest in about three years.
The US and Iran have agreed to end their war and reopen the Strait of Hormuz.
Fed officials' next monetary policy meeting is scheduled for July 28-29.
