Reasoning
The federal funds target range sits at 3.50 to 3.75 percent with a June 2026 SEP median year end rate of 3.8 percent, and nine of eighteen participants already project rates above the current range. Financial conditions indices have historically tightened at least 50bp in the second half of the year in roughly 40 percent of cycles when the FOMC holds or hikes, and the June 17 meeting erased the prior easing bias under Chair Warsh. Recent SEP revisions show a higher rate path than the March 2026 median of 3.4 percent, which tilts the distribution toward modest tightening.Key uncertainty
Whether a sharp deterioration in labor market data triggers renewed easing expectations