The Federal Reserve is now projected to raise interest rates before the end of this year, according to market odds tracked by Polymarket. The Fed has yet to cut or hike rates in 2026 so far, as inflation and an unstable global energy market continue to be concerns. US benchmark interest rates are held in a range of 3.5% to 3.75% by the Federal Reserve, while average 30-year fixed mortgage rates hover around 6.49%.

Federal Reserve Chairman Kevin Warsh declined to say Wednesday whether the central bank needed to consider a rate increase later this month, but said his first weeks in the job have seen risks of higher inflation recede. That was evidence, he said, that markets have already grasped his hard line on prices. “Expectations of future inflation [over the last four weeks] have come down. Inflation risks have come down,” Warsh said at a conference in Portugal alongside foreign counterparts. Anyone expecting the Fed to tolerate inflation running above its 2% goal “would be disappointed,” he added.

As recent CPI data shows, the inflation hike in 2026 has made for a tumultuous US economy. The ongoing US-Iran war has also run rampant on markets since late February. Job growth, which stalled at the end of last year, has firmed. Fortunately, despite those concerns, the U.S. economy has motored along, powered by the AI build-out and a stock-market rally lifting spending among higher-income households. Together, these raise the prospect that even if overall inflation eases in the months ahead, robust growth will keep underlying price pressures stuck above the Fed’s 2% target.

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“We are calling balls and strikes as best we can,” he said. If the Fed delivers on low and stable inflation, he said, “we don’t have to worry about politics. We don’t have to worry about judicial intervention.”