Fed rate outlook through 2026 turns more hawkish after May CPI; markets price higher odds of hikes than cuts

BlockBeats reported on June 11 that the May CPI data released today has strengthened the case for a more hawkish Federal Reserve, with policy debates now broadening to whether rate hikes should be put back on the table. CME FedWatch shows a 30.6% chance the Fed keeps rates unchanged through end-2026. Markets assign just a 1.2% probability to a cumulative 25-basis-point cut by then, versus a 42.9% probability of a cumulative 25-basis-point hike. Odds for larger moves are 20.9% for a cumulative 50-basis-point hike, 4.1% for 75 basis points, and 0.3% for 100 basis points. For the Fed's next meeting in June, the probability of a 25-basis-point cut stands at 3.8%.