Federal Reserve holds rates, sparks split outlook on December hike

The Federal Reserve kept its benchmark interest rate unchanged at 3.5%‑3.75% at the June meeting and eliminated forward guidance, a move that signaled a more hawkish stance. Chair Kevin Warsh’s simplified statement and a dot‑plot shift toward one more hike this year prompted analysts to diverge sharply. One analyst assigns roughly a 50% probability to a rate increase in December and warns that two cumulative hikes could occur by 2027, citing AI‑driven capital spending as a potential driver of future tightening. Another analyst projects no hikes through 2026, but notes the risk of tightening in later years as quantitative‑tightening measures gain priority; the balance‑sheet task force was ranked second among five new task forces. The split reflects heightened uncertainty as each inflation and payroll report now carries more weight in markets.