Fed Halted Through May, Warsh Expected to Cut; ECONOMISTS CAUTION ON POLICY TONALITY (through 02-11-2026)

The Federal Reserve is expected to keep the federal funds rate unchanged through May, with economists predicting an immediate cut in June under potential new Chair Jerome Powell’s likely successor, Kevin Warsh. Over 70% of economists in a February 5–10 Reuters survey expressed concern about a possible erosion of Fed independence after Powell’s term, though views remain split. Nearly all respondents (49/53) expect Warsh to pursue a looser policy stance, with many forecasting two more rate cuts this year. The median path projects the funds rate to remain in the 3.25–3.50% range by late next quarter. Growth is forecast at 2.9% annualized in Q4 2025, 2.0–2.4% in 2026 (up from 2.2%), and inflation is expected to average above the 2% target this year.