The first meeting of the Federal Open Market Committee (FOMC) chaired by new Fed Chairman Kevin Warsh is scheduled to take place later this month on June 17. Wall Street analysts are becoming more optimistic that the Fed will keep interest rates at their current level for the rest of 2026.
Wall Street forecasts during the Federal Open Market Committee meeting on June 16-17
In a survey of 102 economists from June 4-9, 72 economists expected the benchmark federal funds rate to remain in a range of 3.50% to 3.75% through 2026, according to Reuters. Reuters. The results are the most uniform yet in 2026 as policymakers are unlikely to start cutting interest rates anytime soon.
Finally, the markets have deteriorated in the past few weeks. Interest rate futures now include at least one potential rate hike at the end of 2026. These Wallets Street estimates come after strong US employment data for May dampened hopes for a near-term rate cut.
One of the main issues that policymakers study is inflation. According to a separate poll, Inflation is expected in the Consumer Price Index It rose by 4.2% on an annual basis last month. Meanwhile, the Fed’s preferred measure of inflation, the Personal Consumption Expenditures Price Index, reached 3.8% in April.
Several Wall Street economists said geopolitical uncertainty and energy market turmoil in the Middle East continue to lead to higher price pressures. Recently, Israeli-Iranian strikes Which made matters worse before the truce talks.
What do experts say?
“It will be very difficult for the Fed to justify any action at this point and for the foreseeable future,” said Tom Porcelli, chief economist at Wells Fargo. “It will be very difficult to get consensus from Fed officials to agree to the idea of lowering interest rates.”
“The way we can achieve this is to find a way out of the Iranian conflict in the very near term,” Porcelli added. “There is no sense that we will go through this.”
The June 16-17 FOMC meeting will be the first for Trump-nominated Fed Chairman Kevin Warsh. Trump has publicly called for lower interest rates. but, Warsh pointed out Their decision will be independent of any political pressure. Hence, Wall Street experts believe that the central bank will defy political pressure and keep its policy stance unchanged.
“The risk is more towards more persistent inflation, fewer cuts and perhaps more increases than any quick fix,” said Philip Marey, chief US strategist at Rabobank. “A more optimistic scenario has just gone out the window,” he added.
