Fed Expected to Freeze Rates Through 2027 Under New Chair Warsh, CNBC Survey Shows

The Federal Reserve holds its first policy meeting this week under new Chairman Kevin Warsh with markets pricing in no rate changes through 2027, according to a CNBC survey of 32 economists, fund managers, and strategists. All respondents expect rates to hold steady at the current 3.62% federal funds rate, with 88% anticipating the Fed will remove dovish forward guidance amid persistent inflation pressures. The hawkish shift comes despite Warsh's reputation as a dovish policymaker. EY Chief Economist Gregory Daco notes the Federal Open Market Committee has tilted significantly toward restrictive policy, with multiple officials stating rate hikes remain on the table if inflation exceeds the 2% target. Tariff policies and Middle East tensions have elevated inflation risks, dampening earlier rate cut expectations. Economic outlook improves as survey participants lower recession probability to 25% from 33% in April. GDP growth is projected at 2.2% (2026) and 2.3% (2027), with unemployment steady near 4.3%. However, 84% view AI stocks as overvalued by an average 21%, identifying tech valuations as the second-largest economic risk after inflation. The S&P 500 is forecast to reach 8,000 by 2027, implying just 5.5% upside.