Source: Sina FinancePublished: June 18, 2026, 06:45 Full Report At 2 a.m. Beijing time on June 18, the Federal Reserve released the policy statement and Summary of Economic Projections (SEP) following its June FOMC meeting. New Fed Chair Kevin Walsh presided over his first post-meeting press conference. Markets had widely bet that the Fed would launch a rate-cut cycle in the second half of 2026, yet this meeting sent strongly hawkish signals through revised policy wording, officials’ interest rate forecasts and the chair’s remarks, triggering sharp volatility in global financial assets. 1. The Surface Outcome: Rates Held Steady, In Line With Basic Market Expectations All 12 FOMC members voted unanimously to keep the federal funds rate unchanged in the 3.50%–3.75% range, marking the fourth consecutive pause to rate hikes or cuts in 2026. While the steady rate decision itself matched shallow market forecasts, the real market shock stemmed from accompanying documents and verbal communications. 2. Three Core Pieces of Evidence Prove the Fed Has Scrapped All Rate-Cut Signals (1) Overhauled Policy Statement Eliminates All Dovish Forward Guidance Condensed from a 340-word April statement to just 130 words this time, the latest release removed every phrase hinting at future rate cuts: • The line “the Committee will assess whether adjustments to the target range for the federal funds rate may be appropriate” — previously interpreted as a precursor to rate cuts — was deleted entirely. • Balanced language addressing dual risks to employment and inflation was scrapped; the text repeatedly emphasizes inflation remains well above the 2% target. • All predictive language about future policy paths was eliminated, leaving no dovish forward cues for markets.  The revised official text only lays out objective economic facts: solid economic expansion, stable employment, persistent inflationary pressure from geopolitical disruptions to energy supplies, and the Fed’s top priority of restoring price stability, with no advance commitments on rate adjustments of any kind. (2) Stunning Dot Plot Reversal: 2026 Rate-Cut Odds Collapse, Rate Hikes Become Consensus Outlook The updated dot plot outlining individual officials’ rate forecasts served as the key catalyst for the dramatic shift in market pricing. A total of 18 officials submitted projections: • Nine officials expect at least one rate hike in 2026, six of whom back two hikes, and one advocating three hikes over the year. • Eight officials support keeping rates at current elevated levels through year-end. • Only one official still forecasts rate reductions in 2026.  The median projected end-2026 policy rate was sharply raised: up from 3.4% at the March meeting to 3.8%, equivalent to a 25-basis-point rate hike later this year. In merely three months, the group of policymakers swung from a dovish tilt to a hawkish bias, effectively ruling out monetary easing for 2026. (3) Sharply Higher Inflation Projections Eliminate Rationale for Rate Cuts The Fed significantly upgraded its full-year inflation outlook, reinforcing the case for sustained high interest rates: • Headline PCE inflation forecast for 2026: revised up from 2.7% (March) to 3.6%. • Core PCE inflation forecast for 2026: revised up from 2.7% (March) to 3.3%.  Meanwhile, GDP growth projections were slightly lowered and unemployment forecasts trimmed, pointing to stronger-than-expected U.S. economic resilience and a tight labor market. Combined with global energy supply shocks, inflation will cool far more slowly than previously anticipated. Chair Walsh stated clearly during the press conference that rate cuts will not be on the table until inflation reliably falls back to the 2% target. (4) Chair Walsh’s Remarks Further Douse Easing Hopes, Downplay the Dot Plot’s Significance In a landmark shift for this press briefing, Walsh declined to submit his own rate forecast to the dot plot and openly questioned its value as a market signaling tool, vowing to reduce its market weight going forward. His key remarks include: 1. Current policy rates generate uneven tightening effects; lofty equity valuations blunt their power to curb inflation. 2. AI-driven corporate capital investment and productivity gains will boost aggregate demand and prices over the medium run, leaving little room for near-term monetary easing. 3. Five special working groups will be formed to conduct a comprehensive review covering inflation targeting, balance sheet management and external communication frameworks, with no easing measures on the immediate agenda. 4. The Fed is prepared to tolerate near-term economic slowdown to prevent elevated inflation from becoming entrenched in long-term household inflation expectations.  3. Overnight Global Market Sell-Off Triggered Right After the Statement Release (1) Broad Selloff Across U.S. Risk Equities U.S. major indexes plummeted throughout the policy statement and press conference, closing sharply lower: • Dow Jones Industrial Average: down 0.98%, with an intraday drawdown exceeding 500 points at the worst. • S&P 500 Index: down 1.21%, all 11 sectors in negative territory, led by high-valued tech and consumer names. • Nasdaq Composite Index: down 1.34%, with AI growth stocks bearing the brunt as higher discount rates erode valuations of non-cash-flow-heavy assets.  The core trading logic is straightforward: extended high interest rates lift discount rates, prompting capital outflows from high-multiple growth stocks. (2) U.S. Treasury Prices Slump, Yields Surge Across Maturities • The 2-year U.S. Treasury yield jumped nearly 16 basis points, marking one of the largest single-meeting yield spikes in recent years. • The 10-year U.S. Treasury yield rose 6 basis points to 4.49%.  Broadly higher long and short-term risk-free rates lifted the global cost of capital, pressuring valuations of all risk assets worldwide. (3) Sharp Rally in the U.S. Dollar Index The U.S. Dollar Index surged nearly 100 points intraday, breaking above the 100.4 level. All major non-U.S. currencies including the euro, Japanese yen and British pound depreciated, as global capital flowed back into the dollar for carry trades and safe-haven demand. (4) Precious Metals Plunge Sharply Spot gold crashed more than $150 per ounce intraday, with silver falling in tandem. The underlying driver: persistently high real interest rates erode the appeal of non-yielding bullion, triggering mass stop-loss liquidations among long positions. (5) Spillover Pressure on Commodities and Asia-Pacific Equities Crude oil pulled back on fears of prolonged restrictive monetary policy. A-shares and Hong Kong equities opened sharply lower the next trading day, with northbound capital seeing early outflows amid a broad collapse in global risk appetite. 4. CME FedWatch Data: Full Repricing of 2026 Monetary Policy Path Interest rate futures pricing completely rewrote market expectations after the meeting: 1. Odds of a 25-basis-point rate hike at the September FOMC meeting climbed above 50%. 2. Markets have fully priced out rate cuts for 2026 and now expect one to two rate hikes between late 2026 and early 2027. 3. The market’s projected terminal policy rate rose to 4.13%, up nearly 20 basis points from pre-meeting pricing.  Wall Street traders reached a broad consensus: the six-month-long “rate-cut rally” trade is definitively over, with the market’s core narrative shifting to “persistently high rates plus elevated hike risks.” 5. Institutional Analysis: Far-Reaching Impacts of Vanishing Rate-Cut Hopes 1. The global liquidity tightening cycle will drag on for longer. Sustained high dollar financing costs amplify exchange rate and external debt pressures across emerging markets. 2. Divergent pressures on Chinese domestic assets: northbound equity outflows will likely persist, growth stock valuations face headwinds, and gold prices remain under medium-term strain. 3. Corporate financing costs will stay elevated in the U.S., keeping mortgage and corporate credit rates high and weighing on domestic housing and consumer demand. 4. Key data watch window: July and August U.S. CPI and nonfarm payroll prints will directly determine whether a September rate hike materializes.  Upcoming Key Dates The next FOMC policy meeting is scheduled for September 16–17, 2026, with market pricing for a rate hike continuing to climb. The Fed’s five policy reform working groups will release preliminary policy adjustment proposals in autumn 2026