Monetary Policy
- The FOMC announced yesterday (June 17, 2026) it will again hold the Federal Funds target rate at the current range of 3.50% – 3.75%, where it has been since the December 2025 meeting. This was a unanimous decision, voted 12 – 0, and was widely anticipated by the market.
- Yesterday’s meeting was the first led by new Fed Chair Kevin Warsh, who replaces Stephen Miran on the Fed Board of Governors and Jerome Powell as chair (Powell’s board term ends in 2028). Warsh was previously a member of the Fed board from 2006 – 2011.
- Warsh has been an outspoken critic of the Fed’s communication policies since vacating his first term on the board. This stance resulted in a more succinct FOMC statement that removed any indications of forward guidance. The statement did maintain a firm stance that inflation persistently remains above the 2% target and that “the Committee will deliver price stability.”
- Chair Warsh fielded questions from the press but declined to comment on policy outlook. Instead, he used his press conference primarily to announce changes he wants to implement at the Fed that “might improve the conduct of monetary policy” and better meet the Fed’s objectives. He has appointed task forces in each of five areas: Fed communication, Fed balance sheet policy, data, productivity & jobs, and the Fed’s inflation framework. The Chair expects conclusions from the task forces by year-end.
- An updated “dot plot” of interest rate forecasts from FOMC members was still released, though Warsh declined to submit his own projection. Nine of the 18 participating members forecast one rate hike or more this year, increasing the median projection of the Fed Funds rate at the end of the year to 3.8% (one rate hike, changed from one projected rate cut in March’s forecast). The projections call for one rate cut each in 2027 and 2028, then reaching the same longer-run rate of 3.1% that was forecast in March.
- US markets opened with stocks and treasury yields both roughly flat, awaiting yesterday’s decision and press conference. Afterwards, stocks fell and the yield curve bear flattened as the more policy-sensitive short-term rates rose more than longer-term rates.
Economic Conditions and Projections
- All members of the FOMC except Chair Warsh submitted economic projections. There was minimal change to GDP growth and unemployment forecasts. It was noted that economic activity is expanding at a solid pace despite uncertainty in the Middle East.
- 2026 inflation forecasts were materially higher versus March’s projection. The median PCE inflation for this year rose 0.9% to 3.6% while the Core PCE inflation (which excludes volatile energy and food prices) rose 0.6% to 3.3%. Participants did forecast a decline into 2027 to 2.3% and 2.5% for headline and Core PCE, respectively, which are only modestly higher than March’s forecast. The 2.0% long-term target remains, and Warsh said that until the Fed has re-established their commitment to that target there is “no reason to revisit that.”
The FOMC is next scheduled to meet July 28th – 29th, 2026.
Disclosures
The views expressed herein are those of Asset Consulting Group (ACG). They are subject to change at any time. These views do not necessarily reflect the opinions of any other firm. This report was prepared by ACG for you at your request. Although the information presented herein has been obtained from and is based upon sources ACG believes to be reliable, no representation or warranty, express or implied, is made as to the accuracy or completeness of that information. Accordingly, ACG does not itself endorse or guarantee, and does not itself assume liability whatsoever for, the accuracy or reliability of any third-party data or the financial information contained herein.
Certain information herein constitutes forward-looking statements, which can be identified by the use of terms such as “may”, “will”, “expect”, “anticipate”, “project”, “estimate”, or any variations thereof. As a result of various uncertainties and actual events, including those discussed herein, actual results or performance of a particular investment strategy may differ materially from those reflected or contemplated in such forward-looking statements. As a result, you should not rely on such forward-looking statements in making investment decisions. ACG has no duty to update or amend such forward-looking statements.
The information presented herein is for informational purposes only and is not intended as an offer to sell or the solicitation of an offer to purchase a security.
Please be aware that there are inherent limitations to all financial models, including Monte Carlo Simulations. Monte Carlo Simulations are a tool used to analyze a range of possible outcomes and assist in making educated asset allocation decisions. Monte Carlo Simulations cannot predict the future or eliminate investment risk. The output of the Monte Carlo Simulation is based on ACG’s capital market assumptions that are derived from proprietary models based upon well-recognized financial principles and reasonable estimates about relevant future market conditions. Capital market assumptions based on other models or different estimates may yield different results. ACG expressly disclaims any responsibility for (i) the accuracy of the simulated probability distributions or the assumptions used in deriving the probability distributions, (ii) any errors or omissions in computing or disseminating the probability distributions and (iii) and any reliance on or uses to which the probability distributions are put.
The projections or other information generated by ACG regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Judgments and approximations are a necessary and integral part of constructing projected returns. Any estimate of what could have been an investment strategy’s performance is likely to differ from what the strategy would actually have yielded had it been in existence during the relevant period. The source and use of data and the arithmetic operations used for calculating projected returns may be incorrect, inappropriate, flawed or otherwise deficient.
Past performance is not indicative of future results. Given the inherent volatility of the securities markets, you should not assume that your investments will experience returns comparable to those shown in the analysis contained in this report. For example, market and economic conditions may change in the future producing materially different results than those shown included in the analysis contained in this report. Any comparison to an index is for comparative purposes only. An investment cannot be made directly into an index. Indices are unmanaged and do not reflect the deduction of advisory fees.
This report is distributed with the understanding that it is not rendering accounting, legal or tax advice. Please consult your legal or tax advisor concerning such matters. No assurance can be given that the investment objectives described herein will be achieved and investment results may vary substantially on a quarterly, annual or other periodic basis. There is no representation or warranty as to the current accuracy of, nor liability for, decisions based on such information.
Gryphon Financial Partners shall not in any way be liable for claims and make no expressed or implied representations or warranties as to their accuracy or completeness or for statements or errors contained in or omissions from them. This was created for informational purposes only. Gryphon Financial Partners, LLC is an Investment Adviser.