Fed Delivers as Expected, but Guidance Lands on the Hawkish Side

• The Fed took centre stage overnight, delivering a 25bp cut that brought the funds rate down to 3.50–3.75%, a move markets had been firmly positioned for.

• The vote was far from united with two members argued to stay put, while Stephen Miran pushed for a deeper 50bp reduction – a clear sign that policy views inside the Committee are widening.

• Bond markets responded with a modest rally, pulling the US 10-year yield down to roughly 4.16% and the 2-year a few basis points lower as traders digested the outcome.

• Fresh projections showed the Fed marking inflation lower over the medium term, with 2026 estimates trimmed and the longer-run path still pointing back toward the 2% goal by 2028.

• Despite the softer inflation track, Fed officials maintained their earlier guidance of only a slow glide lower for rates — one more cut pencilled in for 2026 and another in 2027 – a noticeably more cautious path than the faster normalisation priced by markets