Fed unlikely to cut soon
- Economists now expect the Federal Reserve to keep its benchmark rate unchanged for at least several more months, with April polling and Fed guidance both pointing away from any near-term cut. - In a Reuters poll, 56 of 103 economists said the fed funds rate would still sit at 3.50% to 3.75% at the end of September, while markets have pushed a cut out to December. - Fed officials last month lifted their 2026 inflation outlook and flagged oil- and tariff-driven price pressure, reinforcing a higher-for-longer path. (federalreserve.gov)
The Federal Reserve looks set to stay on hold, with economists and markets both pushing back expectations for the next rate cut. (reuters.com) (federalreserve.gov) In a Reuters poll conducted April 17-21, 56 of 103 economists said the federal funds rate would still be 3.50% to 3.75% at the end of September. The same poll found 71 still expected at least one cut by year-end, but nearly a third now expect no cuts at all in 2026. (usnews.com) (kitco.com) Fed minutes from the March 17-18 meeting showed futures markets had already shifted, with a rate cut “not fully priced in until December.” The same minutes said options pricing had moved to a path “consistent with no rate change this year.” (federalreserve.gov) The rate question turns on inflation. When the Fed cuts, it is trying to make borrowing cheaper without reigniting price growth; when inflation stays above target, officials usually wait. (federalreserve.gov) Chair Jerome Powell said on March 18 that total personal consumption expenditures inflation was running at 2.8% over the prior 12 months through February, with core inflation at 3.0%. He said near-term inflation expectations had risen in recent weeks, likely because oil prices jumped after supply disruptions in the Middle East. (federalreserve.gov) The Fed’s own projections moved in the same direction. Powell said the median policy maker now sees 2026 total PCE inflation at 2.7%, up from December, and still above the central bank’s 2% target. (federalreserve.gov 1) (federalreserve.gov 2) Officials also kept the target range unchanged at 3.50% to 3.75% in March and said they would assess “incoming data, the evolving outlook, and the balance of risks” before making any further move. The statement added that developments in the Middle East created uncertainty for both inflation and employment. (federalreserve.gov) For households and businesses, that points to slower relief on loans tied to market rates, including some mortgages, auto borrowing and business credit. The next test comes at the Federal Open Market Committee meeting on April 28-29, when traders are overwhelmingly expecting another hold. (cmegroup.com) (federalreserve.gov)
