What Will the Fed Do About Interest Rates for the Rest of the Year? Latest Poll Results Include Big Changes!

As is known, there was a change in leadership at the FED, with Kevin Warsh replacing Jerome Powell. The first FED meeting under Kevin Warsh’s leadership was held, and interest rates were left unchanged in June, as expected.

At this point, while there is curiosity about how the Fed, under Kevin Warsh’s leadership, will act for the remainder of 2026, the latest survey has revealed current expectations.

A Reuters poll indicates that most economists do not expect an interest rate increase or decrease in the remaining six months of the year.

According to the survey, the Fed is expected to keep its benchmark interest rate at 3.50-3.75% until the end of 2026. This represents a significant change from a survey conducted earlier this month that predicted an interest rate cut.

In fact, another Reuters poll from May showed that 32% expected a 25 basis point cut, but this figure dropped to 22% before the June rate decision. The latest poll conducted after the Fed meeting further reduced this figure to 7%.

The results also indicate that, for the first time since 2023, the number of economists expecting interest rate increases has surpassed those expecting interest rate cuts.

Josh Hirt, a senior economist at Vanguard who participated in the survey, stated that maintaining current levels rather than raising interest rates is the most appropriate approach. Hirt noted that FED members are divided right down the middle.

In its latest report, Deutsche Bank states that lower PCE data has reduced expectations for a Fed interest rate hike.

Deutsche Bank, one of Germany’s largest banks, stated yesterday that expectations for a Fed interest rate hike have decreased after the Personal Consumption Expenditures (PCE) price index rose 0.4% month-on-month, falling below economists’ forecast of 0.5%.

Deutsche Bank analysts added that they believe the data helped to temper the Fed interest rate hike rhetoric, which has gained momentum in recent weeks.

They also added that FED officials remain cautious about the inflation outlook.

*This is not investment advice.

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