Overview
A poll of professional economists conducted Feb. 5-10 indicates the Federal Reserve will hold its key policy rate steady for the remainder of Jerome Powell's tenure through May, with the consensus pointing to a cut in June. Most respondents were drawn from banks and other financial institutions.
Expectations for near-term policy
About three-quarters of forecasters - 75 of 101 surveyed - predicted the Fed would keep the federal funds rate on hold at its next meeting, marking a larger majority than the 58% who said the same in last month's poll. Nearly 60% of economists expected the rate to fall into a 3.25% to 3.50% range by the end of the next quarter, with the reduction most likely occurring at the June meeting.
There was no clear consensus in the previous month's poll on where the federal funds rate would stand by that time.
Economic backdrop in the forecasts
Survey medians show U.S. growth slowing to a seasonally adjusted annualized rate of 2.9% in the fourth quarter of 2025, down from 4.4% in the third quarter. Growth for the remainder of the year was projected between 2.0% and 2.4%, which remains above the Fed's estimated non-inflationary pace of 1.8%.
Forecasters raised their full-year average growth projection for 2026 to 2.5% from 2.2% last year, the third consecutive monthly upward revision in the poll. Inflation was expected to average well above the Fed's 2% target through this year. A majority of those surveyed continued to anticipate at least two rate cuts during the year, a view broadly unchanged from January, although there was no firm consensus on the exact level of rates by year-end.
Unemployment was projected to stay near 4.5% through the year, a trajectory that some respondents said argues against the necessity for multiple additional rate cuts.
Concerns about Warsh and Fed independence
More than 70% of economists in the poll said they were worried about a significant erosion of Federal Reserve independence after Powell's term concludes. Poll participants were divided over whether that risk had materially changed since President Donald Trump nominated Kevin Warsh last month.
Respondents described confusion about Warsh's likely policy stance. Earlier writings and speeches attributed to him suggested a preference for tighter policy, while more recent remarks - including an optimistic view that productivity gains from artificial intelligence could be disinflationary - were read by some as signaling a tilt toward easing.
Many economists said they were reserving final judgment on both Warsh's likely policy approach and the implications for Fed autonomy until they hear more during his expected confirmation hearings.
Views on Warsh's likely policy leanings
When asked whether Warsh was more likely to set monetary policy too loose or too tight, almost all respondents to that specific question - 49 of 53 - judged him more likely to err on the side of being too loose.
"It’s very clear Warsh will push for additional easing this year. Now the question is whether he’ll push for a couple more rate cuts, depending on how the economy evolves, or whether he’ll push for a lot more," said Oscar Munoz, chief U.S. macro strategist at TD Securities.
Others warned that a stronger push for easing could risk overstimulating the economy if it coincides with more expansionary fiscal policy. "The Fed will cut twice this year under Warsh (but) it’s not necessarily due to a clear economic argument," said Stephen Juneau, U.S. economist at Bank of America. "If the Fed continues to cut, those will come at a time when we should have more expansionary fiscal policy than we did last year. It could be a recipe for overdoing it."
Political dynamics and voting balance
Some economists noted the political context surrounding Warsh's nomination and emphasized institutional checks within the Federal Open Market Committee. "Trump has an expectation Warsh will come through with what he would like to see," said James Knightley, chief international economist at ING. "But, we’ve got to remember he is just one vote amongst 12 and he would still need to convince a lot of very sceptical or reluctant other Fed officials to do what the president is expecting of the incoming new Fed chair."
Bottom line
The survey paints a picture of short-term policy continuity under Powell, followed by a likely move toward easing in June under his expected successor. At the same time, economists expressed elevated concern about the possibility that the Fed's independence could be weakened after Powell departs and that Warsh may favor a more expansionary policy stance than many officials might prefer. Many respondents are waiting for further public comments and confirmation hearings before making a definitive assessment.