The first half of 2026 saw the market shift from anticipation of rate cuts to a "higher-for-longer" stance, while navigating changes in Federal Reserve leadership and communication style.
Still, what the market may not be fully discounting is the possibility of an outright rate hike. The CME FedWatch tool sees just over a 20% chance of a July meeting hike, but expectations for subsequent meetings remain meaningful.
Federal Reserve Bank of Cleveland President Beth Hammack has made clear that a hike remains firmly on the table.
“We’ve got inflation that’s too high, and it’s been too high for the past five years,” Hammack said in a CNBC interview. “I keep an open mind walking into every meeting. I think every meeting is a live meeting.”
Her comment fits squarely within the new approach under Chair Kevin Warsh. Instead of telegraphing future moves, Warsh has argued markets should react to incoming economic data rather than Fed signaling.
