The Federal Reserve just made it clear: the era of cheap money isn’t coming back anytime soon. At Kevin Warsh’s inaugural FOMC meeting on June 17, the central bank held the federal funds rate steady at 3.50%-3.75% while projecting a median rate of 3.75%-4.00% by year-end 2026.
That projection, paired with the 10-year Treasury yield sitting near 4.5% and the 30-year approaching 5%, puts long-term rates at levels the bond market hasn’t seen in over a decade.
What the Fed actually said
Core PCE inflation, the Fed’s preferred gauge, is now projected at 3.6% for the full year. That’s well above the 2% target. Geopolitical tensions in the Middle East are getting much of the blame for the stubborn inflation readings.
Market-implied futures tell an even more sobering story. Traders are pricing in limited or no rate cuts through late 2026, with expectations pointing toward a gradual grind higher toward 4% by year-end.
