Reasoning
The Federal Reserve, under Chair Kevin Warsh, has recently shifted from a cutting bias to holding rates, with the federal funds target range currently at 3.50 to 3.75 percent. The June 2026 Summary of Economic Projections (SEP) median for the year end 2026 funds rate has been revised upward to 3.8 percent from 3.4 percent in March, and nine of eighteen SEP participants project the year end 2026 rate above the current target range. This upward revision and forward guidance suggest a continued hawkish stance or a slower pace of rate cuts than previously anticipated, making it probable that the upper bound of the federal funds target range will remain above 3.50% by year end 2026.Key uncertainty
The persistence of inflationary pressures and the Fed's response to them through further monetary policy tightening or a prolonged holding period.