Nine policymakers projected at least one hike, and the s and p 500 now faces a Federal Reserve dot plot that is far less dovish than March. The Fed kept interest rates at 3.50% to 3.75% this week, but the new projections point to higher borrowing costs staying in the conversation through 2026.
Fed Dot Plot Turns Higher
Nine policymakers expected higher rates, while six of them saw multiple hikes in the offing. That split left rate cuts largely off the table for the rest of the year and raised the chance of a hike before the end of 2026, a sharper turn from March, when the median forecast still called for one cut in 2026.
18 members of the Federal Open Market Committee made anonymous projections, and the group divided evenly at the top line: nine policymakers saw rates higher by the end of 2026, while nine said they would be unchanged or lower. The median forecast for the end of 2027 stayed at 3.50% to 3.75%, which keeps the policy range anchored even as near-term expectations moved away from easing.
Warsh Rejects Forward Guidance
Kevin Warsh did not participate in the dot plot and said, "I, however, have refrained from offering any projections of my own, consistent with my long-held views." He also told lawmakers, "I don't believe in forward guidance," adding that the Fed tells the whole world what their dots are going to be, what their forecasts are going to be [and] then they hold on to those forecasts longer than they should.
Wednesday also brought a shorter policy statement that dropped March language signaling the next move would be a rate cut. Warsh said, "There will be a review about communications broadly, press conferences, dots, meetings, and the like," and said his colleagues were "very open about changes."
2012 Dot Plot Under Review
The dot plot was first created in 2012, and the new communications task force opens a review of whether that tool stays in place. Gregory Daco said, "I think this might be the last time we see the dot plot," a view that turns the latest release into a potential endpoint rather than a routine quarterly update.
For markets tied to rate expectations, the practical change is not just the Fed’s unchanged target range of 3.50% to 3.75%; it is the narrower path now implied for cuts and the greater odds that hikes return to the table. If that projection holds, bond pricing and borrowing costs have to adjust to a Fed that is less willing to signal relief in advance.
