Episode summary
Instant Reaction: The Fed Decides | Bloomberg Intelligence
Bloomberg Intelligence
· · Hosts: Tom Keene, Jonathan Ferro, Paul Sweeney
Summary
The Federal Reserve left rates unchanged and kept the median dot pointing to one cut in 2026, even as officials lifted their inflation forecasts and nudged growth higher. The move was framed as a hold against a backdrop of elevated uncertainty, with the statement noting that the implications of Middle East developments for the U.S. economy remain uncertain and that the committee is attentive to risks on both sides of its mandate. The summary of economic projections showed PCE inflation at 2.7% this year, core PCE also at 2.7%, GDP at 2.4% in 2026 and 2.3% in 2027, and unemployment at 4.4% in 2026.
Key takeaways
- The Fed held policy steady and still implied one rate cut in 2026, despite higher near-term inflation forecasts.
- Officials raised 2026 PCE and core PCE to 2.7% from December’s lower projections, while keeping the longer-run inflation path toward 2% intact.
- The panel read the decision as a dovish hold, with the market more focused on oil, geopolitics, and supply shocks than on the Fed.
- Several guests argued the Fed is looking through the Middle East shock because labor-market weakness could still open the door to cuts later this year.
- The market reaction stayed muted, with equities and Treasuries little changed because the Fed is not seen as the main driver right now.
Notable quotes
“No change in rates, no change in dots, one descent, but some big changes in inflation expectations”
“PCE inflation this year is forecast at 2.7% up from 2.4% in December”
“This is an incredibly dovish hold just by virtue of the fact that only one person desented and it was Governor Myron”
“There's nothing the central bank can do about this. You cannot print barrels”
“The Fed is still basically forecasting the same inflation glide path as they were before, even with this lift to 2026”
How the episode opens
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Bloomberg Audio Studios podcasts radio news. This is a breaking news update from Bloomberg. Instant reaction and analysis from our 3,000 journalists and analysts around the world
With that Fed decision. Here's Mike McKe. No change in rates, no change in dots, one descent, but some big changes in inflation expectations. Fed officials see one cut still in 2006 at some point, even though their statement notes that uncertainty about the economic outlook remains elevated.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- fed policy decision
- market reaction
- rates outlook
- financial markets
Watch the episode
Watch “Instant Reaction: The Fed Decides | Bloomberg Intelligence” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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