This article is based solely on the dot plot from the Fed's June FOMC meeting, US inflation/employment data, and mainstream investment bank perspectives for macro scenario reasoning. It does not constitute any investment advice. Fed policy is entirely "data-dependent"; inflation, employment, and geopolitical conflicts can alter the interest rate path at any time.

I. Current Baseline Status (June 2026)
1. Benchmark rate: 3.50%-3.75%, unchanged for 4 consecutive FOMC meetings
2. Core contradiction: Inflation stickiness significantly exceeds expectations, the economy and employment remain resilient, and the Fed's policy focus has shifted completely from "rate cuts" to "preventing inflation rebound"
3. Key data (May)
- CPI YoY: 4.2%, highest since 2023; Core PCE full-year forecast raised to 3.3%, well above the 2% target
- Unemployment rate: 4.3%, labor market remains tight, no clear recession signals
4. Key conclusions from the June dot plot (projections of 18 FOMC participants)
- 2026 year-end median rate: 3.8%, implying one 25bp rate hike for the year
- 9 officials support a rate hike this year (3: +25bp, 5: +50bp, 1: +75bp), only 1 sees a rate cut
- 2027 median rate: 3.6%, 2028: 3.4%, rate cut cycle significantly delayed

II. Three Scenario Projections (H2 2026 – Full Year 2028)

Scenario 1: Base Neutral (Probability 60%, aligned with the Fed dot plot median)
1. H2 2026: One rate hike, no rate cuts for the year
- July FOMC: Hold at 3.50%-3.75%, send a clear hawkish signal that "if data does not improve, a September rate hike is likely"
- September FOMC: Hike 25bp, rate rises to 3.75%-4.00%
Trigger conditions: Core CPI and PCE rebound for two consecutive months, services inflation continues to rise, nonfarm payrolls remain strong
- November/December: No further adjustments for the year, year-end terminal rate 3.75%-4.00%
2. 2027: High rates maintained throughout the year, one small rate cut at year-end
- Full-year range 3.75%-4.00%, only a 25bp cut in December, year-end rate 3.50%-3.75%
- Logic: Inflation slowly declines to around 2.5%, but still far from 2%, the Fed will not ease quickly
3. 2028: Formal start of the rate cut cycle, two cuts total (50bp)
- 25bp cuts in March and June, rate falls to 3.00%-3.25%, gradually approaching the 3.1% long-run neutral rate

Scenario 2: Hawkish Extreme (Probability 25%, mainstream view of BofA and Deutsche Bank)
Core premise: Energy, tariffs, and services inflation remain stubborn; AI investment drives demand overheating; inflation stays above 3.2% for the full year
1. 2026: 2-3 rate hikes
- Deutsche Bank: 25bp each in September and December, year-end rate 4.00%-4.25% (cumulative +50bp)
- BofA (most aggressive): Three hikes in September/October/December, cumulative +75bp, rate 4.25%-4.50%
2. 2027: No rate cuts all year, maintain high rates to suppress inflation
3. Rate cuts only begin in the first half of 2028, only 50bp in total for the year, very slow easing pace

Scenario 3: Dovish Easing (Probability 15%, views of UBS and Citi)
Core premise: Oil prices drop significantly, rent inflation continues to fall, employment weakens, initial jobless claims trend upward, inflation declines rapidly
1. 2026: No rate hikes, hold at 3.50%-3.75% all year
- Citi's extreme dovish view: Two cuts in October and December, cumulative 50bp for the year, year-end rate 3.00%-3.25%
2. First half of 2027: Accelerated rate cuts, 2-3 cuts for the year, rate quickly falls toward the neutral range

III. Core Indicators Determining Rate Hikes/Cuts (Key Turning Point Signals)

Signals triggering further rate hikes (conditions for a September hike confirmation)
1. Core PCE at or above 3.2% for two consecutive months, CPI YoY persistently above 4%
2. Monthly nonfarm payroll gains exceed 200k, unemployment rate stays below 4.3%
3. Middle East geopolitical conflicts push oil prices up continuously, imported inflation rebounds
4. Both goods and services inflation spread synchronously, not a one-time disturbance

Prerequisites for shifting to rate cuts (hard to ease without all)
1. Core PCE consistently falls below 2.7% with a downward trend for three consecutive months
2. Clear employment weakening: unemployment rate rises above 4.6%, nonfarm payroll gains fall below 100k
3. US consumer and manufacturing PMIs contract persistently, hard recession risk increases
4. Oil price and import tariff inflation pressures fade completely

IV. 2026-2028 Full Rate Path Comparison Table

Time Period | Base Neutral (60%) | Hawkish Extreme (25%) | Dovish Easing (15%)
H2 2026 | Sep 25bp hike, year-end 3.75%-4.00% | Sep/Dec 50bp total hikes, year-end 4.00%-4.25% | Hold all year / year-end 50bp cuts
Full Year 2027 | Year-end 25bp cut, median 3.6% | No cuts all year, maintain 4.00%+ | 2-3 cuts, median 3.25%
Full Year 2028 | Two 25bp cuts total 50bp, median 3.4% | Two 25bp cuts total 50bp, easing only in H2 | Three or more cuts, close to 3.0%

V. Market and Asset Impact Analysis

1. USD: If a rate hike path materializes, USD index strengthens in the medium-to-long term; if dovish cuts are realized, USD weakens persistently
2. US Treasuries: Rising rate hike expectations push yields higher across the curve; rising rate cut expectations push bond prices up and yields down
3. Equities: Prolonged high rates suppress growth stocks and AI high-valuation sectors; start of a rate cut cycle benefits tech and growth sectors
4. Commodities: Rate hikes are negative for gold and crude oil; rising rate cut expectations are positive for precious metals