Economists Push Fed Rate-Cut Expectations to Mid-2027 as Warsh Signals Hawkish Stance

According to Reuters and Bloomberg surveys conducted June 23-25, over 75% of economists expect the Federal Reserve to hold the federal funds rate at 3.5%-3.75% through year-end, with rate-cut expectations fading rapidly amid persistent inflation and a robust job market. The surveys reveal economists have delayed the timing of the Fed's first rate cut to mid-2027, reflecting consensus that elevated rates will persist longer than previously anticipated.

Reuers' poll shows 15 economists now predict at least one rate increase this year, including five primary dealers, marking the first time rate-hike expectations outnumber rate-cut forecasts (9 economists) since 2023. New Fed Chair Kevin Warsh has adopted a more hawkish anti-inflation stance, significantly reducing forward guidance in the Fed's June policy statement and emphasizing the 2% inflation target as the central bank's priority, signaling a shift toward a prolonged high-rate environment.