Reasoning
With the federal funds target range at 3.50 to 3.75 percent as of June 2026 and the June 2026 SEP median projection at 3.8 percent, nine of eighteen participants already see year end 2026 above the current range, yet the June 17 meeting erased the prior cutting bias and Kevin Warsh has signaled caution. Inflation persistence and resilient labor market data since July 2026 have kept the SEP median above 3.5 percent, but two to three additional 25 basis point cuts remain priced into futures through December if growth slows. Historical precedent from 2018 to 2019 shows the Committee rarely lifts the upper bound once it pauses, unless a clear reacceleration in core PCE occurs.Key uncertainty
Whether core PCE inflation reaccelerates above 2.5 percent in the second half of 2026.