Fed Removes Forward Guidance, Signals Only One Rate Hike Possible in 2026

According to China International Capital Corporation (CICC), the U.S. Federal Reserve removed forward guidance and shifted its policy framework to operate with greater flexibility based on real-time data and balance sheet transmission, with a renewed focus on price stability credibility. The revised statement emphasized a singular objective of "promoting price stability" instead of the previous dual mandate on employment and inflation, signaling a hawkish stance.

CICC noted that the Fed's dot plot projected one rate hike this year as the main hawkish signal. However, actual policy may prove more accommodative given a 9-9 vote split between hike and hold supporters, with key voting members leaning dovish. CICC expects looser policy expectations could rise significantly in the second half as U.S. economic growth slows and inflation moderates.