Why has Wall Street largely abandoned expectations for Federal Reserve rate cuts?

Economists and investors have become more cautious because inflation remains above the Federal Reserve’s target and economic data has been stronger than expected. As a result, many now believe the Fed will keep interest rates elevated for longer.

What are economists expecting from Kevin Warsh’s first FOMC meeting?

Most economists expect the Federal Reserve to leave interest rates unchanged at the June 16-17 meeting. The focus will be on Warsh’s comments about inflation, growth and the future path of monetary policy.

How many economists expect rates to stay unchanged through 2026?

A Reuters survey found that 72 of 102 economists expect the federal funds rate to remain between 3.50% and 3.75% through the end of 2026. This represents one of the strongest consensuses this year against near-term rate cuts.

Why is inflation still a major concern for the Federal Reserve?

Inflation remains above the Fed’s long-term 2% target. Forecasts suggest annual CPI inflation could rise to 4.2% in May, while core inflation is expected to remain elevated, making it harder for policymakers to justify easing monetary policy.

Could the Federal Reserve raise interest rates again?

Some market participants believe that is possible. Interest-rate futures and BNP Paribas forecasts now suggest the Fed could deliver rate hikes in late 2026 if inflation remains persistent.

What does a “higher-for-longer” interest-rate environment mean?

A higher-for-longer environment means borrowing costs remain elevated for an extended period. This can increase pressure on highly leveraged companies and speculative assets while supporting yields on cash and fixed-income investments.

How could higher interest rates affect crypto markets?

Higher rates generally reduce liquidity and can make risk assets such as cryptocurrencies less attractive relative to safer investments. However, crypto prices are also influenced by regulation, adoption trends and institutional demand.

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Wall Street drops Fed cut bets under Warsh

Written by Liezl GambePublished Jun 10, 2026, 5:41 AM

Wall Street has largely abandoned expectations for Federal Reserve rate cuts this year ahead of the first Federal Open Market Committee meeting chaired by Kevin Warsh on June 16-17.

A Reuters survey conducted between June 4 and June 9 found that 72 of 102 economists expect the federal funds rate to remain within a 3.50% to 3.75% range through the end of 2026, reflecting the strongest consensus this year against policy easing.

“It’s going to be very hard for the Fed to justify any action at this point and in the foreseeable future,”

Said Wells Fargo chief economist, Tom Porcelli.

Investors are closely watching fresh inflation data, with forecasts pointing to annual Consumer Price Index inflation accelerating to 4.2% in May from 3.8% in April while core inflation is expected to remain above the Federal Reserve’s target.

Concerns over persistent price pressures have also been amplified by geopolitical tensions in the Middle East and rising energy market risks, while Porcelli said a rapid easing of tensions involving Iran could alter the outlook despite little evidence suggesting that outcome.

Major financial institutions are increasingly backing the higher-for-longer narrative, with BNP Paribas recently forecasting that the Federal Reserve could begin raising interest rates in December 2026 and eventually reverse the three rate cuts delivered during 2025.

Outside traditional markets, some institutional crypto investors remain focused on long-term opportunities, with sFOX chief executive Javier Martinez saying firms are continuing to build positions and infrastructure ahead of potential regulatory developments such as the CLARITY Act.