Fed Cuts Pushed Back
What happened
- Economists now expect the Federal Reserve to delay its first rate cut until late 2026. - A Reuters poll cited war-driven energy shocks and imported inflation as reasons to push easing out at least six months. - That delay raises the prospect of sticky financing costs for firms, despite political debate about Fed independence (reuters.com).
Why it matters
Economists in a new Reuters poll now expect the Federal Reserve’s first rate cut to slip to late 2026, not this summer. (reuters.com) The poll, conducted April 17-21, found 56 of 103 economists expected the Fed’s benchmark rate to stay in a 3.50%-3.75% range through the end of September. In late March, nearly 70% had expected at least one cut by then. (reuters.com) Reuters reported that 71 economists still expected at least one cut by the end of 2026, but the first move was pushed back by at least six months as war-driven energy costs and imported inflation altered forecasts. The same poll said only one respondent expected a cut at the next Federal Open Market Committee meeting. (reuters.com) The Fed sets a short-term policy rate that influences borrowing costs across mortgages, credit cards and business loans. When inflation runs above target, officials usually keep that rate higher for longer to slow demand. (federalreserve.gov) On March 18, the Federal Reserve held its target range at 4.25% to 4.50%. Chair Jerome Powell said the median policymaker still projected the policy rate at 3.4% at the end of 2026 and 3.1% at the end of 2027. (federalreserve.gov, federalreserve.gov) That gap matters because private forecasters are now moving later than the Fed’s own March projections. The Reuters poll points to a slower path to cheaper credit even after officials had signaled lower rates over the next two years. (reuters.com, federalreserve.gov) The inflation backdrop worsened in the latest government data. Consumer prices rose 0.9% in March and 3.3% from a year earlier, while the energy index jumped 10.9% in the month and gasoline surged 21.2%. (bls.gov) Import prices also climbed in March, rising 0.8% after a 0.9% increase in February. Over 12 months, U.S. import prices were up 2.1%, a sign that foreign cost pressures were also feeding into the outlook. (bls.gov) Reuters said the Middle East war had pushed fuel prices sharply higher, hurt consumer confidence and wiped out market pricing for near-term cuts. Some forecasters still expect easing later in 2026, while markets and several economists have shifted toward a longer wait. (reuters.com) For companies refinancing debt or planning expansion, that means borrowing costs may stay elevated well past midyear. For the Fed, it means the first cut now looks less like a summer decision and more like a late-2026 judgment call. (reuters.com)
Key numbers
- Economists now expect the Federal Reserve to delay its first rate cut until late 2026.
- Economists in a new Reuters poll now expect the Federal Reserve’s first rate cut to slip to late 2026, not this summer.
- (reuters.com) The poll, conducted April 17-21, found 56 of 103 economists expected the Fed’s benchmark rate to stay in a 3.50%-3.75% range through the end of September.
- In late March, nearly 70% had expected at least one cut by then.
What happens next
- Economists in a new Reuters poll now expect the Federal Reserve’s first rate cut to slip to late 2026, not this summer.
- (reuters.com) The poll, conducted April 17-21, found 56 of 103 economists expected the Fed’s benchmark rate to stay in a 3.50%-3.75% range through the end of September.
- In late March, nearly 70% had expected at least one cut by then.
Quick answers
What happened in Fed Cuts Pushed Back?
Economists now expect the Federal Reserve to delay its first rate cut until late 2026. A Reuters poll cited war-driven energy shocks and imported inflation as reasons to push easing out at least six months. That delay raises the prospect of sticky financing costs for firms, despite political debate about Fed independence (reuters.com).
Why does Fed Cuts Pushed Back matter?
Economists in a new Reuters poll now expect the Federal Reserve’s first rate cut to slip to late 2026, not this summer. (reuters.com) The poll, conducted April 17-21, found 56 of 103 economists expected the Fed’s benchmark rate to stay in a 3.50%-3.75% range through the end of September. In late March, nearly 70% had expected at least one cut by then. (reuters.com) Reuters reported that 71 economists still expected at least one cut by the end of 2026, but the first move was pushed back by at least six months as war-driven energy costs and imported inflation altered forecasts. The same poll said only one respondent expected a cut at the next Federal Open Market Committee meeting. (reuters.com) The Fed sets a short-term policy rate that influences borrowing costs across mortgages, credit cards and business loans. When inflation runs above target, officials usually keep that rate higher for longer to slow demand. (federalreserve.gov) On March 18, the Federal Reserve held its target range at 4.25% to 4.50%. Chair Jerome Powell said the median policymaker still projected the policy rate at 3.4% at the end of 2026 and 3.1% at the end of 2027. (federalreserve.gov, federalreserve.gov) That gap matters because private forecasters are now moving later than the Fed’s own March projections. The Reuters poll points to a slower path to cheaper credit even after officials had signaled lower rates over the next two years. (reuters.com, federalreserve.gov) The inflation backdrop worsened in the latest government data. Consumer prices rose 0.9% in March and 3.3% from a year earlier, while the energy index jumped 10.9% in the month and gasoline surged 21.2%. (bls.gov) Import prices also climbed in March, rising 0.8% after a 0.9% increase in February. Over 12 months, U.S. import prices were up 2.1%, a sign that foreign cost pressures were also feeding into the outlook. (bls.gov) Reuters said the Middle East war had pushed fuel prices sharply higher, hurt consumer confidence and wiped out market pricing for near-term cuts. Some forecasters still expect easing later in 2026, while markets and several economists have shifted toward a longer wait. (reuters.com) For companies refinancing debt or planning expansion, that means borrowing costs may stay elevated well past midyear. For the Fed, it means the first cut now looks less like a summer decision and more like a late-2026 judgment call. (reuters.com)
