More than half of economists expect the Fed to raise interest rates by the end of the year, Trump's call for rate cuts may have little impact on the Fed's decision

June 16: A Financial Times survey, conducted in partnership with the University of Chicago Booth School of Business’ Rustandy Center and polling 47 economists, found more than half expect the Federal Reserve to raise interest rates by at least 25 basis points by the end of 2026 to address the roughly 3.8% inflation rate. This marks a sharp reversal from market expectations in early March, when the majority of economists projected interest rate cuts. Even with a U.S.-Iran peace agreement potentially opening the Strait of Hormuz to navigation—a move that could ease energy price pressures—many economists argue inflation will continue to seep into the real economy and remain elevated for an extended period. Markets broadly anticipate that Jerome Powell’s first FOMC meeting as Fed Chair will leave interest rates unchanged. Still, the U.S. labor market’s robustness and the economy’s resilience are building internal support within the central bank for additional rate hikes down the line. Joe Lavorgna, Chief Economist for the Americas at Sumitomo Mitsui Banking Corporation and a former advisor to ex-Treasury Secretary Steven Mnuchin, noted that President Donald Trump’s ongoing calls for interest rate cuts will not sway Powell’s policy decisions, as the Fed’s rate path ultimately depends on economic data. Additionally, the Financial Times survey found nearly 70% of polled economists see the probability of a more than 20% pullback in the S&P 500 over the next year as above normal. They flag current tech stocks—particularly the semiconductor sector—as overvalued, signaling structural bubble risks in the market.