Fed Seen Holding Rates at 3.50%-3.75% Through 2026 as Inflation Nears 4.2%
Updated
Updated · Reuters · Jun 9
Fed Seen Holding Rates at 3.50%-3.75% Through 2026 as Inflation Nears 4.2%
3 articles · Updated · Reuters · Jun 9
Summary
72 of 102 economists in a June 4-9 Reuters poll now expect the Federal Reserve to keep its key rate unchanged through the rest of 2026, the first clear consensus this year for no cuts.
War-driven price pressures drove that shift: consumer inflation is forecast at 4.2% for May, core at 2.9%, while the Fed's preferred PCE gauge hit 3.8% in April and is seen staying elevated.
June 16-17 will mark Kevin Warsh's first Fed meeting, and no economist expects a cut despite pressure from President Donald Trump to lower borrowing costs.
Markets have turned even more hawkish after a strong May jobs report, with futures pricing at least one rate hike by end-2026 and some economists expecting the Fed to drop its easing bias.
Growth and labor forecasts remain broadly steady, with unemployment seen around 4.3% and output near 2%, reinforcing the view that persistent inflation—not economic weakness—is driving policy.