Fed Chair Kevin Warsh Raises 2026 Inflation Forecast to 3.6%, Signals Hawkish Stance

According to CME FedWatch Tool, on June 22, the Federal Reserve under new Chair Kevin Warsh kept interest rates unchanged at 3.5%–3.75% but signaled a tougher inflation-focused stance than anticipated. The Fed raised its 2026 inflation forecast from 2.7% to 3.6% and core inflation expectations from 2.7% to 3.3%. For 2027, core inflation was revised higher from 2.2% to 2.5%. Policy rate expectations for 2026 were increased from 3.4% to 3.8%, with 9 of 18 voting members now expecting another rate hike this year. Markets now price in a nearly 90% probability of a rate increase before year-end.
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