Economists Delay Fed Rate Cuts to 2027 Amid Inflation Fears
By John Nada·Jun 13, 2026·2 min read
Economists now see Fed rate cuts delayed to 2027 amid rising inflation fears, contrasting with investor expectations of an October hike.
“The most important signal may not be what the Fed does, but what it stops saying,” remarked Dennis Shen of the International School of Management in Germany, capturing the growing sentiment among economists. According to a Bloomberg News survey cited by Yahoo Finance, economists have now pushed back their expectations for Fed rate cuts to June 2027. This starkly contrasts with prior predictions that anticipated cuts this year.
The survey, which included 35 economists, suggests the Federal Reserve is expected to hold the target range of its benchmark steady until mid-2027, with anticipated cuts lowering the range to 3% to 3.25% by year's end. This adjustment in expectations reflects mounting concerns about persistent inflation, particularly as energy costs ripple through other goods and services.
But investors are singing a different tune. Betting on tighter monetary policy, they're eyeing potential rate hikes by October, as indicated by federal funds futures contracts. This divergence highlights the tension between market sentiment and economic forecasts.
Heading into the June 16-17 Federal Open Market Committee meeting, a consensus seems to prevail. Both survey respondents and investors expect the Fed to maintain its benchmark rate within the 3.5% to 3.75% range, a decision likely to be unanimous under new chairman Kevin Warsh’s leadership.
Persistent inflation is the elephant in the room. Consumer price inflation spiked by 4.2% in May, marking its fastest climb in over three years. The core measure, excluding volatile food and energy prices, rose by 2.9%. This inflationary pressure has shifted the focus of policy debates away from the labor market.
Interestingly, the 'easing bias' entrenched in recent Fed statements now seems anachronistic. Since January, there’s been a push among Fed policymakers to scrap language hinting at future rate cuts. Three-fourths of surveyed economists predict that next week, this language will either shift to suggest a possible rate hike or be removed entirely.
The shift underscores an evolving narrative: inflation, not unemployment, now sits center stage. A whopping 82% of economists polled see inflation as a greater risk, a notable pivot from December, when the labor market was perceived as more perilous.