Kevin Wash FOMC Content Key

Kevin Wash FOMC Content Key

Base rate freeze. But the message is hawkish.
The Fed seems to have decided that it is not enough to cut it out of fear of a recession, nor is it in a situation to cut it due to sufficient inflation.

In other words, the "cut soon" scenario that the market expected has weakened.

The most important thing is the dot plot.

The median forecast for the benchmark interest rate at the end of 2026 is higher than before.

This statement is simple from the market's point of view.

Expectations for a cut ↓ A possibility of prolonged high interest rates ↑ The possibility of further tightening opens up if necessary

It's a burden on the stock market.

The economic outlook is also ambiguous.

Growth forecasts have been slightly lowered, but unemployment has not deteriorated significantly, and inflation forecasts have gone up.

This combination is not a typical "recession scare" but more like sticky inflation + maintaining high interest rates.

So the market didn't collapse right away, but the valuation burden increased.

The market response also shows that.

The stock market was largely unshakable, but short-term interest rates were more sensitive.

In particular, the rise in the two-year interest rate means that the market accepted that "the Fed can maintain higher interest rates for longer than expected."