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Jun 18, 20261
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Federal Reserve Holds Interest Rate at 3.5%-3.75% as Inflation Forecast Rises to 3.6%
The Federal Reserve held its key interest rate at 3.5%-3.75% on June 17, 2026, with the Federal Open Market Committee voting unanimously. The central bank also revised its inflation forecast upward to 3.6% for the year, while trimming GDP growth expectations to 2.2% and lowering the unemployment estimate to 4.3%. The decision reflects ongoing concerns about inflation and a cautious approach to monetary policy amid global uncertainties, including conflicts in the Middle East.
Quick Facts
Who
Federal Reserve
What
maintained the federal funds rate at 3.5%-3.75%
When
June 17, 2026
Where
United States
- maintained the federal funds rate at 3.5%-3.75%
- voted unanimously 12-0 on the decision
- projected PCE inflation of 3.6% for 2026
- projected core PCE inflation of 3.3% for 2026
- projected GDP growth of 2.2% for 2026
The Federal Reserve maintained its benchmark interest rate at 3.5%-3.75% on June 17, 2026, with the Federal Open Market Committee (FOMC) voting unanimously 12-0 to keep the target range unchanged. The decision underscores the central bank's focus on controlling inflation, which remains above its long-term target of 2%.
According to the Federal Reserve's latest Summary of Economic Projections, U.S. inflation as measured by the Personal Consumption Expenditures (PCE) index is expected to reach 3.6% in 2026, up sharply from the March 2026 projection of 2.7%. Core PCE inflation, which excludes volatile food and energy prices, is forecast at 3.3%, also higher than the previous estimate of 2.7%.
The central bank also revised its growth forecast downward. GDP growth for 2026 is now projected at 2.2%, compared to the March estimate of 2.4%. The unemployment rate is expected to edge lower to 4.3%, down from 4.4% in the prior projection. The FOMC noted that economic activity continues to expand at a solid pace despite elevated uncertainty stemming from conflicts in the Middle East and ongoing supply disruptions.
The interest rate outlook also points to a potentially tighter monetary policy. The median projection for the federal funds rate at the end of 2026 stands at 3.8%, higher than the 3.4% forecast in March. The interest on reserve balances (IORB) was set at 3.65%.
In its statement, the Federal Reserve reiterated that its policy decisions will remain data-dependent and focused on achieving maximum employment and price stability. The committee acknowledged that inflation remains elevated due in part to supply chain disruptions and higher energy prices, while also cautioning that the economic outlook is subject to change based on incoming data and global developments.
Analysts view the rate hold and upward inflation revision as a signal that the Fed is in no hurry to ease policy. The decision keeps borrowing costs at elevated levels, maintaining pressure on consumers and businesses as the central bank seeks to bring inflation back toward its target. Market participants will now look to the Fed's next meetings for any indication of future rate moves.
Why This Matters
For investors and businesses, this decision means borrowing costs will remain high through at least mid-2026, squeezing margins and slowing credit-dependent growth. The upward revision of inflation forecasts suggests the Fed sees persistent price pressures, reducing the likelihood of near-term rate cuts. Anyone with variable-rate debt or exposure to rate-sensitive sectors (real estate, autos, small business) should prepare for continued elevated payments and plan for a longer-than-expected high-rate environment.
Timeline & Sources
Jun 17, 2026
WireFOMC voted unanimously 12-0 to maintain the federal funds rate at 3.5%-3.75%.
Jun 17, 2026
WireFederal Reserve released updated Summary of Economic Projections showing higher inflation and lower growth forecasts.
Jun 18, 2026
WireNews outlet Bareksa.com published report on the Fed decision.