Federal Reserve Set to Hold Rates as Markets Fully Price out 2026 Cuts
Key Takeaways: For the June 17 FOMC meeting, CME Fedwatch shows a 96.7% probability of another hold. On March 4, that figure sat at 66.8%, with 30.2% of traders still expecting a cut by June. That easing premium has almost entirely vanished. Wall Street desks remain more optimistic than futures markets. Citi, for example, still forecasts more than 75 basis points in cuts for the year. But by February, Citi postponed it’s prediction. That split matters. Professional forecasters are weighing a scenario where the conflict de-escalates, and oil retreats; futures traders are pricing the world as it exists today. Powell has framed the oil shock alongside prior supply disruptions, the pandemic, tariffs, and called Middle East developments “uncertain.” The Fed will not move until it has cleaner data. Upcoming inflation readings before and after the shock, along with the April jobs report, will draw close scrutiny. Still, the deck is being reshuffled, and Powell’s tenure as Federal Reserve Chair concludes on May 15, 2026. Donald Trump has put forward Kevin Warsh as the next Chair, though Powell’s separate term as a Federal Reserve Governor runs through Jan. 31, 2028. From that vantage point, his position carries less weight; as one of seven governors through 2028, Powell holds a single vote and lacks the authority to guide outcomes in the manner of the Chair. Historical precedent indicates that departing Chairs seldom maintain meaningful influence once seated as a Governor. In the meantime, per usual, American consumers are absorbing the arithmetic. The national gas price average is approaching or exceeding $4 per gallon in a myriad of states, up roughly $1 since before the war. The average 30-year mortgage rate sits near 6.38%. Borrowing costs across the economy are staying elevated because the Fed has no room to ease without risking a second inflation wave. One that may arrive whether policymakers intend it or not. The next FOMC decision lands on April 29. Barring a dramatic reversal in oil prices or a ceasefire that credibly holds, the Fed is expected to do what markets have already priced: nothing.About Author
