However, fresh projections suggest monetary policymakers are increasingly divided over the future path of rates, with some officials now seeing the possibility of a rate hike before any further easing.
Updated projections showed that Fed officials are balancing concerns over sticky inflation against signs of a resilient economy. While some policymakers still expect rates to remain unchanged through the year, others believe additional tightening may be needed if inflationary pressures persist.
Of the 19 members on the policy-setting committee, 18 submitted interest-rate forecasts. Eight officials expect no rate changes this year, three project one rate hike, five foresee two hikes, and one member expects as many as four increases.
The central bank also revised its policy statement, removing language that had previously indicated the next move was likely to be a rate cut. Instead, officials signalled a more data-dependent approach as inflation remains above target.
The Fed described economic activity as expanding at a “solid” pace despite elevated uncertainty linked partly to the ongoing conflict in the Middle East. Policymakers noted that inflation remains high, reflecting supply disruptions and rising energy costs.
“The Committee will deliver price stability,” the statement said.
Fed officials sharply raised their inflation forecasts. Headline inflation is now expected to average 3.6% this year, up from a previous estimate of 2.7%, while core inflation is projected at 3.3%, compared with 2.7% earlier.
Recent inflation data has reinforced those concerns. The Consumer Price Index rose 4.2% in May, marking its highest level in three years, driven largely by higher energy prices. Core inflation, which excludes food and energy, edged up to 2.9%.
Meanwhile, the Fed lowered its US growth forecast for 2026 to 2.2% from 2.4% previously. The unemployment rate is expected to remain around 4.3%.