BlockBeats News, June 18th, several institutions expect the Federal Reserve to keep interest rates unchanged at this meeting, but with a significant divergence on the future rate path. The market's focus is on whether the dovish bias phrasing will be removed from the statement and on the policy communication of the new Fed Chair, Kevin Warsh.

On the hold camp side, Moody's expects the Fed to be unlikely to cut rates in the near term, with the base case scenario of keeping rates unchanged for the year. If inflation expectations continue to rise, the next step may be a shift to hiking. Nomura Securities expects the Fed to keep rates unchanged until 2026. JPMorgan believes that rates will remain unchanged for the rest of this year, with the policy stance likely transitioning from dovish to neutral. Wells Fargo states that it is difficult to find reasons for the Fed to act unless the labor market significantly overheats or inflation outlook deteriorates further. BNY Mellon expects the Fed's statement to suggest that rates face two-way risks and to remove any rate cut expectations for 2026.

On the rate cut camp side, Goldman Sachs expects the Fed to remove the previous hints of rate cuts from its forward guidance, seeing low possibilities of a near-term hike and predicting rate cuts in June and December 2027. UBS expects the Fed to formally abandon its dovish bias but still believes the next move will be a rate cut, expecting cuts in March and June 2027. Citi predicts that as the Middle East situation eases, pushing oil prices lower, and the labor market weakens, the Fed will cut rates by 25 basis points in September, October, and December. Deutsche Bank expects the Fed to start cutting rates from the middle of next year, accumulating a total cut of 75 basis points by the end of 2027.

On the rate hike camp side, Capital Economics believes that there is a high probability of two "insurance rate hikes" in December and early next year. Barclays expects the Fed to hike rates for the first time as early as December. Deutsche Bank says the baseline judgment is still to keep rates unchanged for the long term, but the risk of future rate hikes is increasing. PGIM expects the Fed to hike rates three times this year to curb economic overheating, cut rates three times in 2027, cut once again in 2028, reaching a final rate of 3.375%.

In addition, Barclays, Bank of America, ANZ Bank, Mitsubishi UFJ, and MFS all expect the Fed to hold steady and believe the statement may delete or weaken the dovish bias phrasing. MFS also noted that Warsh may adjust the Fed's communication style, such as no longer using the dot plot or reducing the frequency of press conferences. (FXStreet)