The Federal Reserve is likely to have fully shifted to a strongly hawkish, structural stance.

The Federal Reserve announced its June interest rate decision and held the first press conference with new Chair Kevin Wirth, focusing on two main points:
- Keeping interest rates unchanged, with a unanimous 12-0 vote, also demonstrates Wirth's immediate control over the committee, dispelling previous rumors of internal conflicts.
- The interest rate futures market has completely overturned the earlier expectations of rate cuts. The latest pricing now fully anticipates a rate hike of 25 to 30 basis points before the end of the year, with 9 out of 18 forecasting officials expecting at least one rate increase before year-end.
Aside from the data, as previously mentioned, Wirth has erased all forward guidance and dovish language that hinted at future rate paths over the past few years, returning to the strategic ambiguity style of former Fed Chair Greenspan.
As for whether rates will be raised, at least in my view, the probability is low. Based on last night’s logic and market performance, Wirth’s real intention seems to be using expectations of rate hikes to substitute actual hikes, and this approach is likely to be used for a long time.
There is a term in macroeconomics called "expectation management tightening." Wirth aims to push up U.S. Treasury yields and tighten financial conditions by signaling extremely hawkish policies and threatening rate hikes. As long as the market does the work of simulating rate hikes for him, the Fed may not need to actually raise rates in practice.
The Fed still maintains a tough stance, significantly raising its PCE inflation forecast to 3.6%, and removing all dovish forward guidance to pave the way for this approach.
But it is very likely that for a long period, the rate will remain unchanged at 3.50% to 3.75%.