The Federal Reserve concluded its two-day Federal Open Market Committee meeting on Thursday, voting unanimously to hold the federal funds rate in the 5.25–5.50 percent target range, as policymakers signalled cautious optimism about inflation's trajectory while remaining wary of lingering price pressures tied to trade policy and energy markets.

Fed Chair Jerome Powell, speaking at a press conference following the decision, acknowledged that recent CPI data has shown meaningful progress toward the central bank's 2 percent inflation target, but stressed that the committee requires "sustained confidence" before initiating rate reductions. Powell noted that the sharp drop in oil prices — driven by reduced geopolitical risk premiums as traders priced in a potential Middle East ceasefire — was a disinflationary tailwind, though he cautioned against over-reliance on energy price movements for monetary policy calibration.

The updated Summary of Economic Projections, colloquially known as the dot plot, showed a median expectation of two quarter-point rate cuts before year-end, likely in September and December, representing a modest upgrade from the March projection of one cut. Eleven of nineteen FOMC participants now pencil in at least one reduction by December 2026, up from eight in March, reflecting a shifting consensus as core PCE trends downward.

Markets reacted with measured optimism. The S&P 500 added approximately 0.6 percent in the hour following the announcement, while the yield on the two-year Treasury note dipped around four basis points to 4.71 percent. The US dollar softened slightly against a basket of major currencies, providing a mild boost to multinational earnings expectations. Rate-sensitive sectors including homebuilders and regional banks saw the most pronounced intraday gains.

Economists at Goldman Sachs and JPMorgan both interpreted the statement language as a subtle but meaningful dovish pivot, pointing to the removal of phrasing that had previously described inflation as "elevated." The Fed also released revised GDP growth projections, trimming its 2026 forecast marginally to 2.0 percent from 2.1 percent, citing softening consumer spending in discretionary categories as trade policy uncertainty weighs on business investment decisions.