Fed’s New Projections Hint at a Slower Easing Cycle Through 2026

The Federal Reserve left its target range at 4.25–4.50 percent for a fourth straight meeting and quietly dialed back how much easing it expects through 2026.

Fresh “dot plot” projections show seven officials now see no rate cuts this year—up from four in March—while the median path for 2026 was trimmed to a single cut.

Why the Fed’s Foot Is Still on the Brake

Tariffs cloud the outlook. President Donald Trump’s recent import levies have lifted average U.S. duties to Depression-era levels, muddling inflation forecasts and prompting officials to wait for clearer price data.

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Labor signals are mixed. Payroll growth is slowing and long-term jobless claims sit at a three-year high, yet the headline unemployment rate remains low.

Financial conditions stay loose. Corporate-bond spreads are tight, credit is flowing and equities hover near records—helped in part by buzz around stablecoin-based payment plays—giving policymakers little urgency to ease.

Politics Adds Heat, Not Light

Hours before the decision, Trump blasted Chair Jerome Powell as “very stupid” and demanded up to 250 basis points of cuts, arguing tariffs aren’t stoking consumer prices. Fed officials appear unconvinced; most want proof that higher import costs won’t filter through before pulling rates lower.

The Road Ahead

Soft May inflation numbers suggest firms may be eating tariff costs for now, but economists say shrinking margins could lead to layoffs later in the year. Until the data clarify whether tariffs or job losses pose the bigger threat, the Fed is likely to keep policy steady—at least until autumn—balancing its inflation fight against the risk of stalling the recovery.

Alexander Stefanov

With over 8 years of experience in the cryptocurrency and blockchain industry, Alexander is a seasoned content creator and market analyst dedicated to making digital assets more accessible and understandable. He specializes in breaking down complex crypto trends, analyzing market movements, and producing insightful content aimed at educating both newcomers and seasoned investors. Alexander has built a reputation for delivering timely and accurate analysis, while keeping a close eye on regulatory developments, emerging technologies, and macroeconomic trends that shape the future of digital finance. His work is rooted in a passion for innovation and a firm belief that widespread education is key to accelerating global crypto adoption.