Fed Rate Decision Highlights: Growing Divergence on Rate Outlook, Policy Statement Wording Adjusted

Here are the highlights of the Fed's rate decision Wednesday:

The Federal Open Market Committee voted unanimously to keep the benchmark rate in the target range of 3.5%-3.75%.

The 'dot plot' reflecting rate projections showed divergence among officials on whether to raise rates by end-2026. Nine of the 18 officials expect a rate hike; the median rate projection rose to 3.75% from 3.4% in March; the median projection also shows the rate falling to 3.6% in 2027.

One Fed official did not submit any rate projection; another did not provide a 2028 rate projection.

Fed officials' median projection shows core inflation at 3.3% by end-2026, up from 2.7% in March; GDP growth expected at 2.2%, down from 2.4% in the previous forecast.

The Fed streamlined its policy statement, removing language about possible further rate adjustments and stating that 'the Committee will achieve price stability.'

The Fed said economic activity continues to expand at a solid pace despite high uncertainty, partly due to factors including the Middle East conflict, and that productivity growth and capital investment are strong.

The Fed also said employment growth is keeping pace with labor force growth, the unemployment rate has changed little, and inflation remains elevated, partly reflecting supply shocks that have boosted prices in sectors including energy.