Wosh or shifts to hawkish, Federal Reserve easing expectations face an end

Mars Finance News: On June 4, as this month’s Federal Reserve meeting approaches, market expectations for a Fed rate cut have continued to cool. Reuters columnist Mike Dolan said that the only remaining “one rate cut this year” expectation in the dot plot may be completely removed, and it is not even out of the question that the newly appointed chair Kevin Woorh could push to scrap the dot plot mechanism altogether.

Currently, the AI investment boom and tensions in the Middle East are pushing up energy prices, reigniting inflation pressures, while the U.S. labor market remains resilient. Private employment added 122,000 jobs in May, exceeding expectations, and markets have begun pricing in the possibility of rate hikes later this year.

The report said the meeting is not expected to raise rates immediately, but the policy statement or further communication could soften the easing bias. Earlier, several officials had proposed deleting the relevant forward guidance, and Waller—who had previously been more dovish—has recently shifted toward supporting a tighter stance.

SGH Macro Research economist Tim Duy said the Federal Reserve is re-evaluating last year’s rate-cut decision internally, with more and more officials beginning to lay the groundwork for future rate hikes. At the same time, Woorh has hired conservative economist Paul Winfree—who previously argued for weakening the Fed’s employment target—as an adviser, further deepening market concerns about his hawkish stance.

Analysts believe that as easing expectations fade, the Fed’s policy cycle may have already turned, and volatility in the U.S. Treasury and interest rate markets in the second half of the year could significantly increase.