According to the CME FedWatch Tool, there is a 90% probability that the Federal Reserve will raise interest rates at least once before the end of 2026. This shift in market expectations follows recent inflation data releases.
Bank of America forecasts three separate 25-basis-point hikes in 2026, which would bring rates to a range of 4.25–4.50%. Meanwhile, BMO analyst Jennifer Lee maintains a contrarian position, arguing that rates should remain steady through 2026.
The Federal Reserve committee shows significant division. According to the June 2026 FOMC dot-plot, nine out of 18 members expect at least one rate increase by the end of the year. Kevin Warsh, who became chair in May 2026, is noted for a hawkish approach.
BMO suggests that any potential rate cuts would not occur until at least the fourth quarter of 2027. The bank acknowledges that its base case for holding rates could change if economic data trends shift materially in the coming months.
