Fed officials rule out rate cuts in 2026

Federal Reserve policymakers no longer expect interest-rate cuts in 2026 and indicated that further tightening remains a possibility, though not a certainty, according to the quarterly projections released by members of the Federal Open Market Committee and regional Fed bank presidents.

The report, published on Wednesday following the FOMC meeting, also showed policymakers lowered their forecasts for US economic growth this year after the Fed left benchmark interest rates unchanged.

Nine of the 19 officials participating in the projections see a possibility of higher interest rates, while an equal number expect rates to move lower. One participant submitted no rate projection, fueling speculation that Fed Chair Kevin Warsh was the official in question.

Policymakers also raised their forecasts for headline and core inflation, while slightly lowering their unemployment rate projections for this year, suggesting potential stability in labor-market conditions.

The projections reflect policymakers’ expectations for changes in major economic indicators between the second quarter of each forecast year and the corresponding quarter a year earlier.

Recent data showed the US unemployment rate held steady at 4.3% in May, as expected. Meanwhile, the PCE inflation gauge rose 3.8% in April, while core PCE inflation registered 3.3% in the same month.