Wall Street Analysts Expect Fed To Pause Rates At Kevin Warsh’s First FOMC Meeting

The U.S. Federal Reserve’s first FOMC meeting under new Fed Chair Kevin Warsh is coming up later this month on June 17. Wall Street analysts are becoming more optimistic that the Fed will hold rates at their current level for the rest of 2026.

Wall Street Expectations Around June 16-17 FOMC Meeting

In a survey of 102 economists on June 4-9, 72 economists predicted the benchmark federal funds rate will stay in the 3.50% to 3.75% range through 2026, per Reuters. The results are the most unified yet in 2026 that policymakers are unlikely to start reducing borrowing rates any time soon.

Lastly, markets have turned sour in the past few weeks. Interest rate futures now have built-in at least one potential rate increase at the end of 2026. These Wallets Street estimates come after strong U.S. employment data for May dampened hopes for near-term rate cuts.

One of the key issues that policymakers are considering is inflation. According to a separate poll, the CPI inflation is projected to have risen 4.2% year-over-year last month. Meanwhile the Fed’s preferred measure of inflation, the Personal Consumption Expenditures Price Index, hit 3.8% in April.

The geopolitical uncertainty and Middle East energy market disruptions continue to drive up price pressures, several Wall Street economists said. Recently, the Israel-Iran strikes made things worse before talks of a truce.

What Do Experts Say?

“It’s going to be very hard for the Fed to justify any action at this point and in the foreseeable future. It will be incredibly difficult to get a consensus of Fed officials to go along with the idea of cutting rates,” said Tom Porcelli, chief economist for Wells Fargo.

Porcelli added, “The way we could get there is if we find an exit from the Iran conflict in the very immediate term …. There’s no sense that’s where we’re going with this.”

The June 16-17 FOMC meeting will be Trump nominated Fed Chair Kevin Warsh’s first. Trump has openly called for rate cuts. However, Warsh has indicated that their decision will be independent of any political pressure. Thus, Wall Street experts believe the central bank will defy political pressure and keep its policy stance unchanged.

“The risk is more towards more persistent inflation and fewer cuts and possibly hikes than any quick resolution,” stated Philip Marey, the senior U.S. strategist at Rabobank. He added, “A more optimistic scenario has just flown out of the window.”