A recent survey indicates that economists have pushed back their expectations for the timing of interest rate cuts, now anticipating the Federal Reserve will keep rates steady until the middle of next year.
The median forecast from 35 economists surveyed suggests the Fed will initiate a rate cut in June 2027, with a follow-up reduction before December 2027. This would bring the target range for the federal funds rate down to 3.00%-3.25%. In contrast, a March survey, while projecting the same eventual rate level, had anticipated the cutting cycle would commence later this year.
Only three economists surveyed forecast a rate hike this year. This outlook stands in contrast to investor expectations, which, based on pricing in the federal funds futures market, are betting on further monetary policy tightening as early as the end of October.
Market views are largely aligned regarding the upcoming Federal Open Market Committee meeting scheduled for June 16-17. Both economists and investors widely expect the federal funds rate to be held steady within its current target range of 3.50%-3.75%. This will be the first FOMC meeting under the leadership of new Fed Chair Kevin Warsh. The survey shows that 71% of economists believe this rate decision is likely to receive unanimous support from the committee members.
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