The Federal Reserve entered a new era in 2026 with Kevin Warsh replacing Jerome Powell as chair. The first meeting under Warsh’s leadership happened in June, and as widely expected, interest rates stayed unchanged. Now, the big question is what happens for the rest of the year.
Latest Poll Shows Shift in Expectations
A recent Reuters poll suggests that most economists no longer anticipate any rate cuts in 2026. Instead, they expect the Fed to keep its benchmark rate at 3.50-3.75% through year-end. That is a noticeable change from earlier surveys. Just a few months ago, in May, 32% of economists predicted a 25 basis point cut. That number dropped to 22% before the June decision. After the meeting, only 7% still expect a cut.
What is perhaps more striking is that, for the first time since 2023, more economists now expect rate increases than rate cuts. The mood has clearly shifted.
Mixed Views Inside the Fed
Josh Hirt, a senior economist at Vanguard who took part in the poll, said holding rates steady seems like the right approach right now. He described Fed members as split down the middle on the next move. So there is no clear consensus yet inside the central bank.
Inflation Data Calms Hike Fears
Deutsche Bank weighed in with a note saying that lower-than-expected inflation data has reduced the talk of a rate hike. The Personal Consumption Expenditures (PCE) price index rose 0.4% month-on-month, which was below the 0.5% economists had forecast. According to Deutsche Bank analysts, this helped cool some of the rate-hike rhetoric that had been building in recent weeks.
Still, the bank added that Fed officials remain cautious about the inflation outlook. So while the immediate pressure for a hike might have eased, nobody is declaring victory yet.
This is not investment advice.
