US Economics: The Daily Update – How serious are Fed officials about hiking rates?

Research evidence excerpt

US Economics: The Daily Update – How serious are Fed officials about hiking rates?

US Economics

18 June 2026 Citi Research

9 of 18 dots supporting rate hikes was much more hawkish than we or markets had

expected. The shift in Fed official sentiment was rapid: in April the majority of

officials supported maintaining an "easing bias." By this week's meeting, not only

was the easing bias removed but almost half of Fed officials supported raising rates

sometime over the remaining four meetings of the year.

The 9 officials penciling in rate hikes would have expected their dots to push front-

end yields higher, effectively tightening policy without actually delivering a hike.

But despite the 2026 dots policymakers do not plan to hold policy rates at more

restrictive levels for a substantial period of time - most plan to return to cutting

rates in 2027. And no official thought current conditions warranted a hike - there

were no dissents at Warsh's first meeting.

Rather than a commitment to hike, higher dots appear to be more a means to

signal the intent to remain vigilant about inflation and hike if inflation is not coming

under control. Chair Warsh was quick to draw out a commitment to bring inflation

down as the area where there was unambiguous unanimity between officials.

Dots show significant divisions regarding the right policy path to achieve mandate

consistent inflation. Rather than strongly advocating one policy path, Warsh

suggested the data will speak for itself. In our projections that flow of data will be

dovish.

With oil prices falling and core CPI readings coming in cooler (with core PCE

appearing increasingly as an outlier) we do not expect penciled in rate hikes to

materialize. Instead, softer labor market data over the summer months and Fed