Bloomberg Survey: Economists Push Back Fed Rate Cut Expectations to 2027
Taylor Wilson
A Bloomberg survey of 35 economists now expects the Fed's first rate cut in June 2027 — a full year later than previously forecast — as May CPI surged to 4.2% year-on-year, signaling a longer-than-expected era of high rates.
Why did the rate-cut timeline shift a full year?
In March, economists expected the first cut in 2026. The latest survey pushes it to June 2027, with a second cut in December 2027 bringing rates to 3%–3.25% — the same endpoint, but the entire schedule has slipped roughly one year.
This means → rates won't ultimately fall less, but they'll start falling much later. Borrowing costs stay elevated far longer than previously expected.
The core driver is accelerating inflation: May CPI hit 4.2% year-on-year, the fastest in over three years. Core CPI — stripping out food and energy — rose to 2.9%, as energy costs bleed into broader goods and services.
Inflation vs. jobs — which risk worries more now?
82% of surveyed economists see inflation as the bigger risk, up from less than half in December, when the majority pointed to the labor market as the greater threat.
In plain terms = six months ago the fear was "will the economy cool too fast?" Now it's "will prices keep running hotter?" — the risk calculus has flipped entirely.
This reflects energy-cost pass-through spreading from a single category into overall prices. The Fed's inflation fight is far from over.
What should markets watch at next week's FOMC meeting?
Consensus is near-unanimous: the benchmark rate holds at 3.5%–3.75%, and 71% of economists expect a unanimous vote.
The real focus is on statement language. Since January, a growing number of officials have pushed to drop the "easing bias" — wording that implies the next move is a cut. That language already drew three dissenting votes in April.
Three-quarters of economists expect the Fed to either reword the statement to "a hike is just as likely as a cut" or remove the language altogether. This means → the Fed is withdrawing its implicit promise that a cut comes next.
The most important signal may not be what the Fed does, but what it stops saying.
Dennis Shen
Economist, International School of Management
(Bloomberg survey respondent comment)
What changes does new Chair Warsh bring?
This is Warsh's first FOMC meeting as chair, yet doubts linger: 26% of economists are "unsure" he is committed to the 2% inflation target, and 6% say outright "no" — though that is down from 18% who were unsure in March.
Before taking office, Warsh publicly backed lower borrowing costs, aligning with President Trump, who has called for rate cuts while also saying he wants Warsh to act independently.
In plain terms = the market's worry is straightforward: will the new chair follow the inflation data, or bend under political pressure to ease early?
What does Warsh's "say less" approach mean in practice?
Jefferies chief U.S. economist Tom Simons noted that Warsh told the Senate he does not believe in forward guidance — This means → shorter FOMC statements and a scaled-back Summary of Economic Projections (SEP).
Most economists expect Warsh to reduce forward guidance and reshape the SEP format, but only 23% expect him to cut the frequency of post-meeting press conferences.
This reflects a reform focused not on "fewer meetings" but on "fewer previews" — pushing markets to read the data rather than parse the wording.
Why are economists and futures traders at odds?
Only three surveyed economists expect a rate hike this year, yet federal-funds futures are pricing in a tightening move before October — a stark divergence.
In plain terms = economists see "hold and wait to cut," while traders see "one more hike may be coming" — two fundamentally different reads on where inflation is headed.
The tiebreaker arrives in the months ahead: whether inflation actually retreats will determine who is right — and how long the high-rate environment persists.
Content is for reference only, not financial advice.