Economists Expect the Fed to Hold Rates at Warsh’s First FOMC Meeting

The U.S. Federal Reserve will hold its key interest rate at 3.50% to 3.75% through the rest of 2026, according to 72 of 102 economists polled in the run-up to Kevin Warsh’s first FOMC meeting on June 16-17. None of the economists surveyed expect a rate change at the meeting itself, the first clear consensus of 2026 that the central bank will stay on hold. The share predicting no change in the fed funds rate through year-end has climbed from about a third of economists at the start of 2026 to nearly 70% in the June 4-9 poll of 102 economists.

That near-unanimous hold view comes as war-driven inflation keeps running above the Fed’s 2% target, and as futures markets have moved past pricing in cuts to pricing in at least one possible rate increase. The new chair, confirmed in May, has signaled he will set policy on his own judgment, in the face of President Donald Trump’s repeated calls for lower borrowing costs. Warsh’s first test of independence may be holding the line, not cutting.

The June Consensus Is a Hold

The June 4-9 Reuters poll marks the strongest convergence yet this year on a no-change path, with 72 of 102 forecasters projecting the federal funds rate will stay in its current 3.50% to 3.75% range through December. The remaining economists in the survey expect a cut later in the year, not at the upcoming meeting. None expect a change at the June 16-17 session itself, a level of agreement that reflects a string of higher inflation prints and a labor market that has refused to weaken.

The new consensus sits in the open frustration of forecasters who earlier expected easier policy. Wells Fargo chief economist Tom Porcelli and Rabobank senior U.S. strategist Philip Marey are among the forecasters quoted in the June poll, with both seeing the Fed’s case for action narrow. The shift marks the first clear consensus this year that policymakers are unlikely to start reducing borrowing costs any time soon, even as Trump has publicly called for lower rates. Some have gone further, with rate futures now pricing at least one rate hike by end-2026.

The pivot has been unusually fast. In the June poll, 72 of 102 forecasters expect the Fed to hold through year-end, up from about a third at the start of the year and just under half in May. The same survey shows most rate-cut calls have been pushed into next year or dropped altogether.

Inflation Now Doubles the Fed’s Target

Inflation is now running at roughly double the Fed’s 2% target on the central bank’s preferred gauges, the highest readings in nearly three years. The four main measures all sit well above where the central bank wants them, and a Reuters poll of economists shows the gap is expected to widen before it closes.

The PCE index is forecast to average 3.9% in the second quarter, 3.8% in the third, and 3.6% in the fourth, according to the Reuters poll. The May CPI report, due on June 10, is expected to show another step up. That release will be the final major inflation print before the policy decision. It will be the first test of whether the inflation pulse is fading or sticking.

Services and goods prices both contributed to the April acceleration, the Commerce Department data showed. Goods prices rose 0.7% on the month, pushed by a 5.5% jump in gasoline. Services prices rose 0.3%, with housing and utilities up 0.6% and food services and accommodations up 0.5%.

Even a softer Q1 GDP print has not changed the picture. First-quarter growth was revised down to 1.6% annualized, below the initial 2% estimate, the Commerce Department said in its third estimate. Consumer spending still rose 0.5% in April, fed in part by a drawdown in the personal savings rate to 2.6%, the lowest since June 2022. The combination of stubborn demand and tariff-driven goods inflation is the mix the Fed has been trying to look past.

Warsh Inherits a Hotter Hand Than Powell Built

Kevin Warsh took the oath of office as Fed chair on May 22, three days after the Senate installed him in a 54-45 vote. His arrival came as the Fed’s preferred inflation gauge sat at a near-three-year high, the labor market was holding firm, and the President who nominated him was publicly demanding lower rates. At his confirmation hearing in April, Warsh told the Senate Banking Committee he would set policy on his own judgment and not take orders from the White House.

The political backdrop is unusually loud. President Trump appointed Powell in 2018 and then spent years criticizing him for not moving more aggressively to cut rates. Warsh’s nomination followed a pressure campaign that included a criminal investigation of the central bank by the Justice Department, dropped only after Sen. Thom Tillis agreed to lift his procedural hold. Powell will stay on the Fed’s governing board after stepping down as chair, an unusual move he has said is meant to safeguard the institution from political pressure. NPR has more on Warsh’s 54-45 Senate confirmation.

Warsh’s record on Fed intervention is itself part of the story. A long public record against making the central bank a routine price setter is now paired with a chair who has called for changes in how the Fed measures inflation and communicates. The Warsh Fed intervention reform agenda will now run alongside a much higher bar for rate cuts than markets assumed a year ago.

How the Easing Bias Died in One Quarter

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.

That was Wells Fargo chief economist Tom Porcelli, quoted in the same poll that found 72 of 102 economists now expect a hold through year-end. Inside the Fed, the policy language itself is shifting. Fed Governor Christopher Waller, speaking at a Frankfurt conference on May 22, said he would support removing the easing bias from the FOMC’s policy statement to make it clear that a rate cut is no more likely in the future than a rate increase. Waller stopped short of calling for a near-term rate hike, and the Forbes piece on the expected shift away from the easing bias noted his remarks aligned the Fed’s policy guidance with the hold view Wall Street had been pricing.

The June FOMC meeting will publish an updated quarterly dot plot of rate projections, the first under Warsh. Most forecasters expect the dot plot to signal steady rates through 2026, with a small but visible number of participants marking higher, a shift from March, when the median projection pointed to one cut. At the April 28-29 FOMC meeting, three members of the committee already hinted their next move could as easily be a rate increase as a cut, an unusual public split for a Fed that has held rates unchanged since December 2025.

The Iran War Reset the Disinflation Story

The single biggest driver of the inflation reacceleration is the war in the Middle East, economists in the Reuters poll said. Iran-related attacks on tanker traffic in the Strait of Hormuz, the narrow waterway that handles a large share of global oil shipments, have pushed crude and gasoline prices higher since the conflict escalated. The result is an energy-driven price shock layered on top of an economy that was already running above the Fed’s 2% target. The same Iran-related disruptions have shown up in gasoline prices, which jumped 5.5% in April.

May CPI is the test of whether the shock is starting to fade or sticking. Reuters-polled economists expect headline CPI to climb to 4.2% year-on-year, with core CPI at 2.9%, both above the Fed’s 2% goal. Most of those surveyed had earlier called the inflation pulse transitory, and the June survey shows that view collapsing.

The Fed’s own history is what its officials keep pointing to, and in 2022 the central bank initially described the post-Ukraine inflation shock as transitory before raising rates in one of the most aggressive tightening cycles on record once it became persistent. Eli Nir, U.S. economist at TD Securities, said the worry now is whether sequenced supply shocks are starting to shift inflation expectations. Supply shocks should be one-off and transitory, Nir said, but if we start getting them in sequences that might start shifting inflation expectations in a way we wouldn’t normally expect. They were wrong there in 2022, he said, and we were all wrong at that point.

The Strait of Hormuz has remained disrupted by the Iran war. Energy prices have stayed higher as a result. Warsh’s first meeting looks set to deliver a quiet hold that the entire Street has already priced in.

What a Hold Means for Mortgages and the Dollar

A pause that lasts through 2026 reshapes the math for households and markets in several ways at once. Mortgage rates, which had drifted lower on cut expectations earlier in 2026, have climbed back as those bets were unwound. Savings and money-market yields remain anchored by the policy rate, and the dollar has held firm as the U.S. rate-cut story has faded.

• 4.3%: projected U.S. unemployment rate, per the June 4-9 Reuters poll
• 2.0%: projected average annual U.S. GDP growth, per the same poll
• 4.2%: projected May CPI inflation, per a separate Reuters survey
• 0.4%: monthly gain in the headline PCE price index in April, per the Commerce Department

Philip Marey, senior U.S. strategist at Rabobank, said the balance of risks has tilted toward higher, not lower, rates. The risk is more towards more persistent inflation and fewer cuts and possibly hikes than any quick resolution, Marey said. A more optimistic scenario has just flown out of the window, he added. The Reuters poll showed economists now see rate-cut calls pushed out of 2026 or dropped entirely.

Most economists expect the June FOMC decision to be a hold, and the Fed’s 2026 meeting calendar still has four more scheduled sessions after the June one. The next decision is due July 28-29.

Frequently Asked Questions

What is the current federal funds rate?

The Federal Reserve has held its target range for the federal funds rate at 3.50% to 3.75% since December 2025, with no change at any of the four FOMC meetings since.

When is the next FOMC meeting?

The Fed’s next Federal Open Market Committee meeting runs June 16-17, 2026, the first chaired by Kevin Warsh. The committee then meets again on July 28-29, September 15-16, October 27-28, and December 8-9.

What does a Fed pause mean for mortgage rates?

A Fed pause keeps the policy rate steady, but mortgage rates also reflect Treasury yields and term premiums. With the Fed on hold, the 30-year fixed mortgage rate is likely to remain elevated rather than drift toward the 6% range borrowers had expected earlier in 2026.

Disclaimer: This article is for informational purposes only and does not constitute financial, investment, or policy advice. Rate expectations, inflation figures, and policy projections can change quickly. Readers should consult a qualified financial professional for decisions tied to borrowing, saving, or investing. Figures are accurate as of publication on June 10, 2026.