Wall Street Fed Review June FOMC: Hawkish Policy Shift, 2026 Rate Cut Hopes Fully Fade

June 18 (Jin10 Data) — The Federal Reserve kept its federal funds rate unchanged at 3.50%-3.75% unanimously during the first FOMC meeting led by newly-appointed Fed Chair Kevin Warsh. Major Wall Street institutions revised their rate outlooks post-meeting, writing off 2026 rate cut bets entirely, as the Fed delivered a subtle hawkish pivot for higher-for-longer monetary policy.

Tai Hui, Chief Asia Market Strategist at J.P. Morgan Asset Management, pointed out sweeping revisions to the official FOMC statement. The updated statement is nearly half the length of the April version, stripping out all dovish forward guidance and simplifying assessments on economic growth, labor conditions and inflation trajectories. The Fed bears no urgency to loosen policy, with current rates sufficient to balance growth and inflation risks. The committee will stay patient on policy adjustments. He sticks to the call that the Fed will hold rates steady for the whole 2026, with the inaugural rate cut delayed to mid-2027 at the earliest.

David Mericle, Chief U.S. Economist at Goldman Sachs, canceled its prior forecast for two 2026 rate cuts. Strong payroll prints, the Fed’s upgraded 2026 core PCE inflation forecast to 3.3%, and dot-plot projections showing most policymakers open to a 2026 rate hike pushed the central bank to a neutral-hawkish tilt. Sustained labor resilience and sticky inflation have ruled out 2026 easing. Goldman Sachs moved its first rate cut forecast from December 2026 to June 2027, noting an additional modest hike remains on the table if oil rallies reignite inflation pressure.

UBS Global Wealth Management’s Chief Investment Officer holds identical views, ruling out any Fed rate cuts in 2026. Chair Warsh has overhauled the Fed’s communication toolkit via condensed policy statements and muted dovish rhetoric, easing market bets on imminent monetary easing. While de-escalating U.S.-Iran tensions have dragged crude prices down and cooled near-term inflation concerns, sticky service inflation and a tight labor market offer no justification for policy easing. UBS forecasts prolonged rate holds through 2026, with the first cut priced for March 2027.

Overall, the June FOMC meeting marks a notable policy shift: the Fed has abandoned dovish rate-cut bias and embraced prolonged rate stability. Market pricing for second-half 2026 easing has evaporated, and elevated interest rates will remain in place throughout 2026.