Fed Holds Rates Steady, Raises 2026 Inflation and GDP Forecasts

The U.S. Federal Reserve pursues price stability and maximum employment, and its benchmark interest rate directly affects mortgages, corporate financing and financial markets. With the Middle East crisis driving energy prices higher and inflation still above the Fed’s 2% target, policymakers have limited room to cut rates.

On June 17, 2026, the Federal Open Market Committee held its target rate at 3.50%–3.75%, leaving it unchanged for a second consecutive meeting. The Fed raised its 2026 PCE inflation forecast to 2.7% and its GDP growth projection to 2.4%, while its dot plot continued to project a year-end interest rate of 3.4%.