--- title: The Fed’s Next Move Could Be Bad News for Borrowers description: Markets expected Fed rate cuts in 2026. Now some economists say rate hikes are back on the table. authors: - name: Martha C. White role: Writer url: https://money.com/author/martha-c-white/ education: BA, English, Princeton University at_money_since: 2015 articles: 349 covers: - Federal Reserve Rate Cuts - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes - Technology editors: - name: Katherine Peach role: Associate Editor url: https://money.com/author/katherine-peach/ bio: Katherine Peach is an associate editor with a focus on news and email at Money. She didn’t always intend to write about money. She’s a classically trained pianist who dreamed of becoming an archaeologist. However, in 2007 Katherine began working in financial publishing as an editor for Agora Inc. (Apparently, unearthing ideas about improving your personal finances isn’t such a bad career alternative!) Katherine’s writing and editing work has been featured in Investing Daily, Clever, Investor Junkie, The Palm Beach Letter, Truth & Plenty, Independence Monthly, NICHE, AmericanStyle, AntiqueWeek, Millennial Money, Money Done Right, TheStreet, Sure Dividend and many others. Katherine holds a Bachelor of Arts in Ancient Studies with concentrations in Archaeology and Ancient Languages and a minor in Literature from the University of Maryland, Baltimore County. She is a member of Phi Beta Kappa. education: University of Maryland, Baltimore County at_money_since: 2025 articles: 14 covers: - Federal Reserve Rate Cuts - Banking - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes published: '2026-06-12T15:26:40.000Z' modified: '2026-06-12T18:58:02.000Z' section: Federal Reserve Rate Cuts tags: - News word_count: 776 canonical: https://money.com/fed-rate-hike-probability/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![inflation graph with the central bank building](https://img.money.com/2026/06/News-inflation.jpg) Federal Reserve officials are all but assured to leave the benchmark federal funds rate where it is at the central bank’s meeting next week, but the outlook is hazier going into the second half of the year. What’s more, there’s a growing sentiment among financial pros that the central bank’s next rate move could be a hike. In a research note published last week, Goldman Sachs Chief U.S. Economist David Mericle said the prospect of rates going up instead of down isn’t as far-fetched as it was a month earlier. “Fed commentary has turned more hawkish in recent weeks, with many participants saying that hikes are possible if the inflation situation worsens,” he wrote. “We now put a higher 20% probability (vs. 10% previously) on modest rate hikes.” This swift [reversal](https://money.com/how-many-fed-rate-cuts-2026/) of expectations is enough to give investors whiplash. “Coming into this year, people were [expecting](https://money.com/next-fed-meeting-rate-cuts-2025/) up to two cuts," says Chris Zaccarelli, chief investment officer for Northlight Asset Management. But now, the Fed’s hands have effectively been tied. “They have no ability to cut,” he observes, adding, “There's a lot of people already talking about rate hikes before the end of the year.” According to [CME FedWatch](https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html), which uses futures market activity to predict rate movements, the probability of the Fed hiking rates at its July meeting ticked up from 0% to 13% in the past month alone; expectations for a September hike leaped from 5% to 40%. The swing in expectations gets larger the further out you look. A month ago, there was a greater than 75% probability that rates either wouldn't budge at all or would tick down by the end of 2026. But as of Thursday, futures markets had reversed that likelihood to less than 30%. What's more, markets now predict a greater than 25% chance of two or more quarter-percentage-point hikes before the year is out. Zaccarelli believes it's premature to assume a hike is inevitable, but allows that it could be a possibility if today's economic conditions persist. “If the labor market continues to hold up, there's no reason why you'd be cutting rates into sticky inflation,” he notes, adding that inflation hawks have “the upper hand.” “If inflation stays exactly the way it is now, I think they’ll have no choice but to start to raise rates,” he says. ## Why policymakers are at a crossroads At the most recent Federal Open Market Committee meeting in April, officials voted to leave the fed funds rate unchanged at its current range of 3.5% to 3.75%. But beneath the surface of that nonevent was an unprecedented amount of dissent, with some committee members in favor of decreasing and others arguing that an increase could soon be necessary. Economists and analysts say the discord among policymakers is likely to persist. “We expect several Federal Reserve policymakers to emphasize more forcefully that policy tightening remains possible should inflation prove more persistent than expected,” EY-Parthenon Chief Economist Gregory Daco wrote in a research note published Thursday. Former Fed Chair Jerome Powell — who elected to remain on the board as a governor, in another norm-busting move — was known in Washington and on Wall Street for building consensus. It remains to be seen, however, whether new Fed Chair Kevin Warsh will [uphold](https://money.com/new-fed-chair-kevin-warsh/) the same commitment to solidarity. Uncharacteristically sharp divisions between officials have been on display in recent months in policy statements and FOMC members’ public statements. Experts predict that dissenting opinions will contribute to a stance that could be characterized as a political and economic stalemate. Some of this is a function of the [political](https://money.com/can-trump-demand-lower-interest-rates/) calendar, according to Skyler Weinand, chief investment officer at Regan Capital. In a recent analysis, Weinard pointed out that the looming midterms could deter officials leery of being perceived as viewing monetary policy through a political lens — an [accusation](https://money.com/trump-fed-rate-cuts-2025-inflation-tariffs/) President Donald Trump has made repeatedly over his time in office. “It's unlikely that we'll see a rate hike before the midterm elections, and any such hike is likely a year away,” Weinard predicted. Even some analysts with a positive inflation outlook acknowledge that Wall Street might have to wait a while before seeing rate cuts. "We see no circumstances where there is inflationary stickiness," Jay Hatfield, CEO and chief investment officer of Infrastructure Capital Advisors, tells Money via email. But even if the Iran conflict is settled and the Strait of Hormuz reopened within the next two or three months, rate cuts could still be a ways off. "We expect there will be a significant delay in cuts post-Strait reopening," Hatfield predicts. 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