Wait… the Fed might actually raise rates again

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This is the part that caught my attention.

The Fed kept rates unchanged at 3.5% to 3.75%.

That sounds boring.

But the message behind it was not.

The new dot plot showed a big change. The market was looking for future cuts, but now the Fed is sending a much more cautious signal.

No rate cuts expected this year.

And here is the interesting part: 9 out of 18 Fed officials now see at least one rate hike by the end of 2026.

That is a pretty big change in thinking.

The reason?

The Fed is basically saying inflation is still a problem, but the economy is strong enough that they don’t feel pressure to rush into cuts.

Kevin Warsh, the new Fed chair, did not submit his own dot projection, but he announced a review of Fed communication, including the dot plot. The statement was also changed, removing language that leaned toward future cuts.

The market reaction tells the story.

Fed futures are now pricing in a much higher chance of a hike, with traders even pricing roughly 1.5 hikes by year-end.

The weird part?

A few months ago, the debate was “when will the Fed cut?”

Now the debate is “could the Fed actually hike again?”

The Fed did not just leave rates unchanged.

They changed the conversation.