Former Federal Reserve Vice Chairman Roger Ferguson expects the central bank to implement two interest-rate hikes this year or early next year [1].
This prediction signals a potential pivot in monetary policy that could increase borrowing costs for consumers and businesses. A shift toward a more hawkish stance typically aims to cool an overheating economy by curbing spending.
Ferguson, who also serves as the Vice Chair of The Business Council, shared his outlook during an interview on CNBC’s ‘Squawk Box’ program [1]. He said the rate-cut era is over and a hike this year is now near certain [2].
Recent economic data appears to be driving this expectation. Fed officials are monitoring inflation pressures, with headline PCE inflation reaching 4.07% through May 2026 [2]. Core PCE inflation, which strips out volatile food and energy prices, stood at 3.41% during the same period [2].
These figures provide the Federal Reserve with the necessary cover to raise rates to maintain price stability. The internal sentiment within the central bank also reflects this trend; nine of 18 Fed officials are projecting at least one hike in 2026 [2].
Ferguson said that the timing of these moves depends on how inflation trends evolve. While he anticipates two hikes [1], the broader consensus among officials suggests a minimum of one increase is likely to occur before the end of the year [2].
“Expect two rate hikes this year or early next year.”
The projection of multiple rate hikes suggests that inflation remains more stubborn than previous Federal Reserve targets anticipated. If the Fed follows this hawkish path, it indicates a priority on curbing the PCE inflation rate over supporting immediate economic growth, potentially leading to slower mortgage and loan expansion across the U.S. economy.
