June FOMC: Stranger changer

Research evidence excerpt

June FOMC: Stranger changer

least three more into that camp (Exhibit 3). Fed rhetoric has also turned less willing to

look through inflation shocks after years of overshooting.

More interestingly, who wants to hike this year? Our base case is three dots (Hammack,

Logan, Schmid) showing 25-50bp of hikes in 2026, though others (Kashkari, Musalem,

Goolsbee) could join for either this year or next.

Elsewhere, we expect the longer-run median to stay at 3.125%. While the direction of

travel is upwards, we think the Fed is probably still a bit too low on r*. Movement was

minimal in March, and June will likely hold steady. The 2028 median should also remain

at 3.125%, consistent with hitting long-run targets. This implies about 50bp of cuts over

2027-28. We assume one cut per year, lifting the 2027 median by 25bp to 3.375%.

Exhibit 3: We anticipate a substantial hawkish shift in the 2026 dots

BofA estimates of which policymakers correspond to the 2026 dot plot forecasts from March, along with projections for June (%)

4.25 Hammack Schmid

4.00 Logan

3.75 Atlanta Barr Hammack Kashkari Logan Musalem Schmid Atlanta Barr Collins Daly Goolsbee Kashkari Musalem Waller

3.50 Barkin Collins Cook Goolsbee Jefferson Powell Williams Barkin Cook Jefferson Paulson Powell Williams

3.25 Daly Paulson Bowman Warsh

3.00 Bowman Waller

2.75 Miran Governors 2026 voters Non-voters

2.50

March June

Source: Federal Reserve Board, BofA Global Research. Note: we don’t expect Chair Warsh to submit SEP projections. But if he does, we think he’ll project two cuts this year.

BofA GLOBAL RESEARCH

Macro projections: upsets unlikely

We expect 2026 projections to be largely marked to market (Exhibit 1). Growth should be

revised down to 2.1% from 2.4% on a weak 1Q, while inflation, especially headline will