Fed Expected to Hold Rate Until May, 6-Month Outlook Rises Amid Warsh Uncertainty (FOMC)

The Federal Open Market Committee is expected to keep the federal funds rate unchanged through May, with a potential pivot to easing in June, according to a Reuters survey of economists. Of 101 respondents, 75 anticipate the next meeting to remain unchanged, up from 58% in January. About two-thirds project the first rate cut in mid-2026, with a median path to 3.25%–3.50% by year-end and at least two cuts this year. However, there is no consensus on the terminal Fed Funds rate. Economists express concern over potential Chair Jerome Powell’s successor, Kevin Warsh, who is perceived by 49/53 to favor an overly accommodative stance. Over 70% worry Warsh could signal a significant weakening of the Fed’s policy independence. The survey also shows 2025Q4 U.S. growth slowed to 2.9% annualized, with 2026 growth expected 2.0%–2.4% (above the non-inflation measure). Inflation is forecast to remain above 2% through the year, and the unemployment rate around 4.5%, tempering enthusiasm for further easing.