Rate Cut Expectations Hold Despite Higher Borrowing Costs

Economists surveyed by Bloomberg continue to expect that the Federal Reserve's next move will be an interest-rate cut, despite some market participants pricing in higher borrowing costs for later this year.

The forecasters see a quarter-point reduction in the benchmark rate by the end of the third quarter of 2027. This is consistent with their views from last month, but a quarter later than previously anticipated.

This outlook stands in contrast to those held by policymakers and investors who suggest rate hikes may be on the horizon, contradicting the current market expectations.