Rate hike fears resurface as Fed minutes reveal split committee
Warsh also announced five task forces to review the Fed’s operations, including one focused on communications, though the minutes noted that only “some participants commented that they welcomed the opportunity to review the Committee’s communications tools and practices.”
The updated dot plot of individual rate projections tilted narrowly toward one hike this year. Nine of the 18 officials who participated in the Summary of Economic Projections (SEP) indicated that the federal funds rate would finish 2026 above its current target range of 3.5% to 3.75%, with eight expecting no change and one projecting a cut.
The median estimate for the rate at year-end now stands at 3.8%, up from 3.4% in the March projections. Warsh declined to submit his own projection.
The backdrop driving the split was an inflation picture that remained hot. The Fed’s preferred gauge — the personal consumption expenditures (PCE) price index — rose 4.1% in May from a year earlier, the highest reading since April 2023. That is driven in part by energy price shocks tied to the conflict in the Middle East. Core PCE, which strips out food and energy, climbed 3.4%.
Kevin Warsh reiterated that inflation remains above target and emphasized the central bank’s focus on restoring price stability, offering little indication of near-term rate cuts.https://t.co/1AIgCCzCNo
— Mortgage Professional America Magazine (@MPAMagazineUS) July 1, 2026
What it means for mortgage professionals
The rate hold came as little surprise to mortgage professionals tracking the Fed’s statement, particularly with geopolitical factors continuing to weigh on the central bank’s thinking.
