FOMC Lifts 2026 Rate View to 3.8% as Warsh Puts Price Stability First
Updated
Updated · yardeniquicktakes.com · Jun 21
FOMC Lifts 2026 Rate View to 3.8% as Warsh Puts Price Stability First
3 articles · Updated · yardeniquicktakes.com · Jun 21
Summary
Nine of 18 Fed officials now project rate hikes by year-end after the June SEP raised the median 2026 fed-funds path to 3.8% from 3.4% and lifted 2026 core PCED inflation to 3.3% from 2.7%.
Warsh reinforced that hawkish shift in his first press conference, calling inflation "a choice," making price stability the FOMC's top goal and signaling the Fed would look through any Iran-driven supply-side disinflation.
The 2-year Treasury yield jumped to 4.19% after the meeting, while markets still price only a 38% chance of a July hike and a 92% chance by September.
Thursday's data could test that pricing: final Q1 GDP is seen near 1.6%, May core PCED at 0.24% month on month and 3.30% year on year, with jobless claims and durable goods also due.
Broader indicators still point to firm activity and sticky prices, with Atlanta Fed GDPNow tracking Q2 growth at 3.0%, manufacturing surveys improving and prices-paid components staying elevated.