Reasoning
The Federal Reserve's current target range of 3.50 to 3.75 percent, with nine participants projecting year end 2026 rates above this range and the Fed Chair having removed the prior cutting bias, suggests a restrictive monetary policy stance likely to persist. This tightening environment historically correlates with moderating wage growth, but given the continued tightness in the labor market, a complete collapse below 4.3% is not guaranteed. The June SEP median for year end 2026 funds rate of 3.8 percent indicates a continued expectation of higher for longer rates, which could still allow for some residual wage pressures to keep growth above 4.3% in certain releases.Key uncertainty
The trajectory of inflation in H2 2026 and its impact on future Federal Reserve policy decisions.