Reasoning
The Federal Reserve under Chair Kevin Warsh has signaled a hawkish pivot, holding rates at 3.50 to 3.75 percent and removing prior cutting bias. The June 2026 Summary of Economic Projections (SEP) median for the year end 2026 federal funds rate has significantly increased to 3.8 percent, with nine of eighteen participants projecting rates above the current range. This suggests a willingness to maintain higher rates, increasing the likelihood that economic conditions could necessitate a rate hike or sustained higher rates that push the three month moving average of the unemployment rate up enough to trigger the Sahm Rule.Key uncertainty
The actual trajectory of inflation and subsequent FOMC policy decisions in the latter half of 2026, particularly whether they pivot back to easing or continue a hold or hike stance.