TLDR
- Markets assign 99.4–99.6% odds the Fed holds rates unchanged at the June 17 FOMC meeting
- Prediction markets give a 64% chance of a rate hike before July 2027
- Bank of America survey shows 40% of fund managers now expect at least one hike in 12 months, up from 16%
- US annual inflation hit 4.2% in May, up from 3.8% in April
- Crypto markets are reacting cautiously as tighter monetary policy reduces liquidity for digital assets
The Federal Reserve is set to keep interest rates unchanged at its June 17 FOMC meeting. CME FedWatch data puts the odds of no change at 99.4–99.6%.
📊MARKETS BET FED WILL HIKE AGAIN
Investor expectations for a Fed rate hike are rising. Bank of America’s June fund manager survey shows 40% expect at least one hike in the next 12 months, up from 16% in May. Rate-cut hopes fell sharply, with only 28% expecting cuts versus 50%… pic.twitter.com/S59YbqgYAA
— *Walter Bloomberg (@DeItaone) June 16, 2026
Kevin Warsh is chairing his first FOMC meeting after being appointed by President Donald Trump. He takes the chair at a time when inflation has made the path to rate cuts more complicated.
A CNBC survey of 32 economists, strategists, and fund managers found that none expect the Fed to change rates at this meeting. They also don’t expect any change through 2027.
But the bigger story is what markets are pricing in for the future. Kalshi prediction market data now shows a 64% chance of a rate hike before July 2027. That number has risen sharply from earlier in 2026.
A Bank of America fund manager survey backs that up. Nearly 40% of respondents now expect at least one hike in the next 12 months. That’s up from 16% just a month ago. Only 28% expect rate cuts.
Inflation and Energy Prices Are Driving the Shift
Inflation is a key reason expectations have changed. US consumer prices rose 0.5% in May from the prior month. On an annual basis, inflation climbed to 4.2%, up from 3.8% in April.
Rising oil prices have added to the pressure. Tensions between the US and Iran have pushed energy costs higher, raising concerns about supply through the Strait of Hormuz.
The CNBC survey found that 88% of respondents expect the Fed to drop language suggesting its next move would be a rate cut. That would be a clear shift in tone, even without an actual rate change.
Gregory Daco, chief economist at EY, told CNBC that Warsh “will inherit a committee that has become noticeably more hawkish,” despite being seen as dovish himself.
Fed funds futures markets reflect this too. Traders no longer expect meaningful easing over the next several years and see rates staying close to the current 3.62% level.
Crypto Markets Feel the Pressure
Crypto markets have reacted cautiously to the shifting rate outlook. Higher interest rates tend to pull liquidity away from riskier assets, including digital currencies.
The Bank of Japan recently raised its rate by 25 basis points to 1%, its highest in over 30 years. The European Central Bank also hiked by 25 basis points to 2.25%, its first increase since 2023.
A potential US-Iran agreement, announced after the CNBC survey closed, could ease energy price pressure. If inflation cools as a result, the Fed may have more flexibility on future policy decisions.
For now, crypto and broader financial markets are waiting on signals from the FOMC about where policy is headed next.
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