Economists raise US inflation forecasts, see Fed holding rates until 2027

The Federal Reserve isn’t cutting rates anytime soon. That’s the increasingly unified message from Wall Street’s top economists, who now expect the central bank to keep its policy rate locked in place through the end of 2026, with any relief potentially delayed until 2027.

Goldman Sachs revised its rate cut timeline to June and December 2027, pushed back from its previous forecast of December 2026 and March 2027. J.P. Morgan went a step further, projecting the Fed will hold steady through all of 2026 and potentially hike by 25 basis points in September 2027.

The numbers behind the hawkish shift

A Reuters poll conducted from June 4 to June 9 painted a stark picture of consensus. Out of 102 economists surveyed, 72 expect no rate change for the remainder of 2026. Not a single respondent forecasted a cut at the June FOMC meeting. That’s nearly 70% of the field saying the federal funds rate will stay parked in the 3.50% to 3.75% range.

TD Economics raised its 2026 core PCE forecast to 3.3%, up sharply from 2.7%. The FOMC itself, under new Chair Kevin Warsh, bumped its median core PCE inflation projection for 2026 to 3.3% at the June 16-17 meeting. The adjusted expected funds rate landed at 3.8%.

More than 70% of economists in the Reuters poll raised their inflation outlook compared to previous surveys.

May 2026 non-farm payrolls came in at 172,000 jobs added, with unemployment sitting at 4.3%. The annualized Consumer Price Index reached 4.2%.

What’s driving persistent inflation

Two forces keep showing up in every economist’s inflation model: tariffs and energy prices.

Rising oil prices, driven by geopolitical tensions in the Middle East, have added fuel to inflationary pressures. Tariff impacts continue rippling through the economy, pushing up costs for goods in ways that monetary policy alone can’t easily fix.

Goldman Sachs specifically cited stronger-than-expected job growth and elevated core PCE inflation above 3% as reasons for pushing back its rate cut timeline.

What this means for crypto and risk assets

Here’s the thing about a higher-for-longer rate environment: it makes every risky asset compete against risk-free government bonds paying attractive yields. When you can earn 3.8% sitting in Treasuries, the opportunity cost of holding volatile assets like crypto goes up meaningfully.

Sectors sensitive to borrowing costs, like real estate and consumer discretionary, are likely to see increased volatility. Crypto markets, which have historically moved in tandem with broader risk sentiment, face the prospect of capital outflows as investors reassess their appetite for volatility against a backdrop of stubborn inflation and elevated rates.

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