[88300] The Federal Reserve signals a hawkish policy; markets react with turbulence

The Federal Reserve surprises with a hawkish approach: Markets are in the midst of repricing

The US central bank left interest rates unchanged at the 3.50%–3.75% range, but published a "Dot Plot" that was surprising in its hawkish approach. According to Forex Signals, 9 out of 18 committee members now anticipate an interest rate hike before the end of 2026, compared to previous forecasts for cuts recorded in March. The inflation forecast (Core PCE) was revised upward to 3.3% compared to 2.7% previously.

In a report highlighting the uncertainty, Forex Signals notes that the new Fed member, Warsh, "refused to submit his dot" and announced the establishment of five task forces to re-examine the central bank's activities. The events led to high volatility, with the dollar strengthening and gold prices recording declines.

At the same time, FXStreet Forex News reports that the markets are reacting nervously to the move, as the focus now shifts to the policy decisions of the Bank of England (BoE). Investors now anticipate, according to CME FedWatch data cited in Forex Signals, a 77% probability of an interest rate hike by December, a significant jump compared to only 24% a month ago.

All eyes are now on the initial jobless claims data released today, June 18, 2026, which serve as the first test for the labor market following the shift in Fed policy. Analysts warn of continued volatility, especially in the USD/JPY currency pair, which is influenced by both the Fed's hawkish approach and the interest rate hike implemented by the Bank of Japan earlier this week.