- Fed seen on hold in unanimous decision - Policymakers poised to drop easing bias - Updated SEP likely to lift core PCE, lower growth forecasts - Rates seen on hold through year-end - Focus will turn to Warsh’s debut - Rate announcement due at 14:00 EST/18:00 GMT - Press conference set for 14:30 EST/ 18:30 GMT
Ahead of Wednesday’s FOMC decision, the watchword among central bank watchers has been “continuity”. Anyone expecting Kevin Warsh, the newly appointed Fed chair, to shake things up at his first meeting in charge will likely be disappointed.
Federal Reserve policymakers are widely expected to leave interest rates unchanged at the conclusion of their two-day meeting, with the fed funds target range currently at 3.50%-3.75%. The decision is expected to be unanimous.
Analysts look for the accompanying statement to acknowledge continued labour market resilience, while also recognising elevated inflationary pressures.
JP Morgan economist Michael Feroli said these developments could push the committee in a more hawkish direction.
“While Fed speakers remain comfortable with the current rate setting, their communications around the rate path are due to be adjusted,” Feroli said. “At the last meeting, three committee members dissented in favour of removing the implicit easing bias in the statement’s phrasing.”
In practical terms, the statement is widely expected to drop any suggestion of an easing bias and instead adopt a more neutral policy stance.
To go any further, Fed watchers argue, could raise questions about Warsh’s credibility.
It is widely believed that Donald Trump backed Warsh in part because of his criticism of former Fed Chair Jerome Powell, particularly over Powell’s reluctance to cut rates.
BMO Capital Markets strategist Ian Lyngen said markets are already braced for Warsh’s debut to strike a firmer tone than many initially expected.
“After all, the war in the Middle East and the resulting energy shock have materially changed the macro backdrop and refocused investors on near-term inflation risks,” Lyngen said.
Updated forecasts
Alongside the decision, Fed officials will publish an updated Summary of Economic Projections (SEP), refreshing their three-year economic outlook.
Economists expect the Fed to raise its forecasts for core PCE while upgrading its near-term employment outlook. GDP growth projections are likely to remain broadly unchanged, though there is scope for a modest downgrade to near-term activity. Beyond that, analysts see little reason for meaningful revisions.
Feroli said the expected adjustments could be enough to push the median dot higher, signalling no rate cuts in 2026.
“We could also see two or three dots projecting a hike this year,” he said. “We think enough of the committee still views recent inflation developments as transitory for the median to retain one cut next year. But there is a one-in-three chance it shows no cuts next year as well. We still see the 2028 median dot at 3.125%.”
Less is more
Source: Barclays Global Research
During his Senate confirmation hearing, Warsh criticised what he sees as the Fed’s over-reliance on forward guidance and dot plots, arguing that the central bank has become overly focused on managing market expectations through frequent communication.
“The post-meeting press conference will likely be the most intriguing part of next week’s meeting,” Feroli said. “Despite Warsh’s comments about the Fed talking less, we don’t think he would do himself any favours by shortening the press conference or reducing its frequency.”
Recent developments in the Middle East should give Warsh some breathing space and ease any immediate pressure to act. The pass-through to households has so far been largely confined to energy-related price growth, while underlying core inflation has continued to ease and is running around half a percentage point above target.
Rate markets are currently pricing no change in policy through the remainder of the year.
The biggest elephant in the room during Warsh’s press conference may be whether he is asked about the prospect of sharing a future policy meeting with his predecessor, Powell — an awkward scenario that remains firmly on investors’ radar.
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- Fed seen on hold in unanimous decision
- Policymakers poised to drop easing bias
- Updated SEP likely to lift core PCE, lower growth forecasts
- Rates seen on hold through year-end
- Focus will turn to Warsh’s debut
- Rate announcement due at 14:00 EST/18:00 GMT
- Press conference set for 14:30 EST/ 18:30 GMT
By Harry Daniels
LiveSquawk News
@HarryDaniels71
18:00 GMT | 15 Jun 2026
Ahead of Wednesday’s FOMC decision, the watchword among central bank watchers has been “continuity”. Anyone expecting Kevin Warsh, the newly appointed Fed chair, to shake things up at his first meeting in charge will likely be disappointed.
Federal Reserve policymakers are widely expected to leave interest rates unchanged at the conclusion of their two-day meeting, with the fed funds target range currently at 3.50%-3.75%. The decision is expected to be unanimous.
Analysts look for the accompanying statement to acknowledge continued labour market resilience, while also recognising elevated inflationary pressures.
JP Morgan economist Michael Feroli said these developments could push the committee in a more hawkish direction.
“While Fed speakers remain comfortable with the current rate setting, their communications around the rate path are due to be adjusted,” Feroli said. “At the last meeting, three committee members dissented in favour of removing the implicit easing bias in the statement’s phrasing.”
In practical terms, the statement is widely expected to drop any suggestion of an easing bias and instead adopt a more neutral policy stance.
To go any further, Fed watchers argue, could raise questions about Warsh’s credibility.
It is widely believed that Donald Trump backed Warsh in part because of his criticism of former Fed Chair Jerome Powell, particularly over Powell’s reluctance to cut rates.
BMO Capital Markets strategist Ian Lyngen said markets are already braced for Warsh’s debut to strike a firmer tone than many initially expected.
“After all, the war in the Middle East and the resulting energy shock have materially changed the macro backdrop and refocused investors on near-term inflation risks,” Lyngen said.
Alongside the decision, Fed officials will publish an updated Summary of Economic Projections (SEP), refreshing their three-year economic outlook.
Economists expect the Fed to raise its forecasts for core PCE while upgrading its near-term employment outlook. GDP growth projections are likely to remain broadly unchanged, though there is scope for a modest downgrade to near-term activity. Beyond that, analysts see little reason for meaningful revisions.
Feroli said the expected adjustments could be enough to push the median dot higher, signalling no rate cuts in 2026.
“We could also see two or three dots projecting a hike this year,” he said. “We think enough of the committee still views recent inflation developments as transitory for the median to retain one cut next year. But there is a one-in-three chance it shows no cuts next year as well. We still see the 2028 median dot at 3.125%.”
During his Senate confirmation hearing, Warsh criticised what he sees as the Fed’s over-reliance on forward guidance and dot plots, arguing that the central bank has become overly focused on managing market expectations through frequent communication.
“The post-meeting press conference will likely be the most intriguing part of next week’s meeting,” Feroli said. “Despite Warsh’s comments about the Fed talking less, we don’t think he would do himself any favours by shortening the press conference or reducing its frequency.”
Recent developments in the Middle East should give Warsh some breathing space and ease any immediate pressure to act. The pass-through to households has so far been largely confined to energy-related price growth, while underlying core inflation has continued to ease and is running around half a percentage point above target.
Rate markets are currently pricing no change in policy through the remainder of the year.
The biggest elephant in the room during Warsh’s press conference may be whether he is asked about the prospect of sharing a future policy meeting with his predecessor, Powell — an awkward scenario that remains firmly on investors’ radar.