A Bloomberg survey of 35 economists shows the Federal Reserve will likely hold interest rates steady until June 2027, with the first quarter-point cut arriving then and a second by December. The median forecast puts the benchmark at 3% to 3.25% by year-end 2027 — the same terminal rate economists projected in March, but delayed by roughly twelve months. Only three respondents expect any hike this year, while futures markets price in tightening as early as October.

Inflation data drives the shift. Consumer prices rose 4.2% in May from a year earlier, the fastest pace in over three years, while core inflation accelerated to 2.9%. Energy-cost spillover into broader goods and services has policymakers debating whether to drop the "easing bias" from next week's FOMC statement. Three-quarters of economists surveyed expect that language to vanish or flip to a hiking bias, signaling the next move could go either way.

Chairman Kevin Warsh faces his first meeting June 16-17, with 71% of economists predicting a unanimous hold at 3.5% to 3.75%. Skepticism about his inflation commitment has eased — just 6% now doubt his dedication to the 2% target, down from 18% in March — though 26% remain unsure. Most economists anticipate Warsh will curtail forward guidance, shrink the FOMC statement, and overhaul the Summary of Economic Projections.

The widening gap between economist forecasts and market pricing creates a tangible policy uncertainty premium for bond investors.