Reasoning
The FOMC has already removed its cutting bias as of the June 17, 2026 meeting, holding rates steady and signaling a higher terminal rate (nine of eighteen SEP participants now project year end 2026 above the current 3.50 to 3.75 percent range, versus the March median of 3.4 percent). With Kevin Warsh as Fed Chair adopting a more hawkish stance and labor market conditions apparently resilient enough to warrant rate hikes rather than cuts, any remaining 2026 statement (the FOMC meets eight times annually, so at least one meeting remains after July 11) will very likely either remove language about labor market downside risk entirely or substantially soften it by shifting focus to upside inflation risks or fuller employment. The directional trajectory from the June meeting strongly indicates further normalization of risk language away from a slack focused narrative.Key uncertainty
Whether an unexpected sharp deterioration in labor market data (employment report, jobless claims, participation rate) between now and the next meeting could force the Committee to retain or reemphasize downside labor risk language despite the hawkish tilt established in June, or conversely whether they accelerate language removal if data remains strong.