Overview
- A stronger-than-expected May jobs report showing 172,000 payroll gains helped trigger stock and bond selloffs and led traders to price out Fed rate cuts for 2026.
- A Reuters poll of economists found roughly 70% now expect the federal funds rate to remain at 3.50%–3.75% through 2026 and major banks such as Goldman Sachs have pushed their first cut forecasts into 2027.
- President Trump told NBC he opposes rate increases and praised Kevin Warsh while urging lower rates, but Warsh has said he made no commitments and Fed decisions will depend on votes by the 12-member FOMC.
- Rising headline inflation, partly driven by higher energy prices tied to tensions in the Middle East, has increased the odds that the Fed will remove any easing bias and could consider hikes later in 2026.
- Warsh, sworn in on May 22, faces his first FOMC meeting on June 16–17 where markets will watch the policy statement, updated projections and committee votes for signals about the near-term path of rates and the balance sheet.