Warsh removes 2026 rate-cut projection; hike odds 66%

At the Federal Open Market Committee meeting on June 16, Chair Kevin Warsh presided as the Fed left the target range for the federal funds rate at 3.50%–3.75%. The quarterly dot plot removed its last projection for a 2026 rate cut, and futures traders pushed the probability of at least one rate hike this year to about 66%.

The decision to hold rates carried little surprise: futures had priced roughly a 97% probability of a pause before the meeting. The June dot plot was produced without Warsh’s participation and no longer shows any participant projecting a cut in 2026; earlier dot plots had included at least one projected cut for each 2026 meeting.

Warsh did not include a personal rate projection in the Summary of Economic Projections, making him the first Fed chair in 14 years not to participate in that element of the SEP. He has criticized the dot plot as an imperfect communication tool and said he prefers leaner forward guidance. In his first press conference he emphasized an inflation-first approach and offered no timetable for when cuts might return.

The changed outlook affected longer-term borrowing costs. The 10-year Treasury yield moved toward about 4.47% and the 30-year yield approached about 4.97%. Some analysts had expected multiple voting members to indicate the possibility of a rate increase before December, and the final projections reflected that view.

Traders had already been raising the odds of further tightening before the meeting after strong U.S. jobs data and tightening steps by the European Central Bank. At the start of 2026, investors had priced in one to two cuts by December; the June projections removed that expectation.

Market participants will watch upcoming U.S. economic reports and future Fed communications for signals on whether the probability of a year-end hike will rise or fall.