Reasoning
The June 2026 SEP median projection for the year end 2026 federal funds rate has significantly increased to 3.8 percent from 3.4 percent in March 2026, indicating a hawkish shift by FOMC participants. With the current target range at 3.50 to 3.75 percent and the Fed Chair having erased the prior cutting bias, it is more probable that the upper bound will remain at or above 3.50 percent by year end 2026. Nine of eighteen SEP participants project the year end 2026 rate above the current target range, further supporting this outlook.Key uncertainty
The future path of inflation and employment data, and the subsequent reaction of Fed Chair Kevin Warsh to this data, will be the primary determinant of whether rate cuts materialize by year end 2026.