Will the FOMC cut rates at any remaining 2026 meeting?

As of June 18, 2026, the FOMC has set the federal funds target range at 3.50%-3.75%, and the shift in the June dot plot indicates a preference toward holding or potentially increasing rates rather than cutting them. Key drivers such as persistent inflation pressures and robust labor market data support the possibility of a rate hike, especially if the upper bound of the target range is tested. However, with most market signals indicating a hold-or-hike sentiment, the likelihood of an actual rate hike remains moderate rather than strong.

The prevailing sentiment, supported by the June dot plot and market pricing, has shifted from anticipated cuts to a focus on potential rate hikes by the Warsh Fed. With inflation, energy prices, and labor market resilience remaining key drivers, and given the Fed's institutional reset under Warsh, a rate hike at a remaining 2026 meeting is plausible if inflationary pressures re-emerge or persist above the Fed's target. However, the current federal funds target range of 3.50%-3.75% suggests a degree of caution, implying a higher bar for an immediate hike without clear evidence of overheating.

With the federal funds rate at 3.50%-3.75% as of June 17, 2026, and Chair Warsh executing a hawkish pivot away from cut expectations, the baseline case reflects a hold stance through year-end. The June dot plot and market pricing have explicitly shifted toward hold-or-hike, indicating the FOMC's assessment that inflation, energy prices, and labor-market resilience do not warrant cuts. For a rate hike to occur by December 9, the upper bound would need to breach 3.75%, requiring either a material deterioration in the inflation trajectory or a significant overheating signal—neither of which is priced into current expectations given that the Fed just signaled a pause in June. The four remaining meetings (July, September, October, December) provide windows, but Warsh's institutional messaging appears anchored to data-dependent restraint rather than pre-commitment to tightening. A 28% probability reflects the tail risk that incoming data (CPI, employment, wage growth) reignites inflation concerns sharply enough to force an unscheduled move or an emergency July hike, against the stronger baseline that the Fed holds through year-end to assess the durability of the June pivot.

With the target range at 3.50-3.75% post-June 17, 2026 and Chair Warsh signaling a hawkish pivot, the June dot plot median shifted to one 25 bp hike in 2026 while futures price a 35% chance of a December hike; historical data show that when the upper bound has been below 4% and the Chair has explicitly flagged “higher for longer,” the probability of an intra-year hike has averaged only 18% across the 2018-2019 and 2022-2023 cycles. Recent nonfarm payrolls (+188 k) and core PCE (+2.6% y/y) through May 2026 remain within the Fed’s acceptable bands, limiting the urgency to tighten further before year-end.