OIL: Oil End of Day Summary: Crude Falls

The shift in the dot distribution vs March is below. 

• It was a predictably close call going into this meeting between 2 cuts (3.9%) and 1 (4.1%) being signalled by the Dots for end-2025. The new Dot Plot shows 9 participants saw 1 or zero cuts, while the remaining 10 eyeing 2 or 3 cuts won the day. However, 7 of 19 members now anticipate no rate cuts this year. We think that the 8 in the 2-cut median probably reflects the core of the Committee including Chair Powell (with Gov Waller probably even more dovish at 3 cuts), but this wasn't far from signalling a higher end-year rate.
• More surprising was the shift higher in outer years, though again this was a close call.
• 10 of 19 now see a cumulative 75bp or less of cuts between now and end-2026, versus just 6 who saw such little easing at the March meeting. That said, there's one member who sees even more cumulative cuts by end-2026 than they expected before, and the median was close to remaining steady at 3.4%.
• For end-2027, there is a clearer shift with 6 dots at 3.1% now appearing in the 3.4% row. 11 of 19 members now see rates at 3.4% or higher by end-2027, versus 8 prior. This median is usually just a little above the longer-run dot, and perhaps this upward shift is reflective of the economic projections' medians showing that the 2% inflation target won't be hit by end-2027.
• On that note, none of the longer-run dot projections were changed vs March's meeting, a modest surprise given some had seen the median itself shifting up at this meeting (it remains at 3.0%).

The 2025 macroeconomic projection revisions were very close to expectations. GDP was revised down 3pp to 1.4% for 2025, with unemployment up 0.1pp to 4.4% and core PCE up 0.3pp to 3.1%.

• Less expected though not a huge surprise is the weaker GDP forecast for 2026, down 0.2pp to 1.6%, with 0.1pp higher unemployment to 4.5%.
• And Core PCE is also not seen returning to target through the 2027 horizon, which was also unexpected, potentially suggestive that the FOMC sees the current government policy mix's impact on inflation as not-quite-"transitory".
• See main variables below.

FOMC statement comparison: https://media.marketnews.com/FOMC_Statement_Comparison_June_vs_May_ea52e6595b.pdf