Major bank drops bombshell on Fed interest-rate bets

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• The market-implied probability of a quarter-point Fed rate hike in 2026 is 50% as of May 15, up from 40% the previous day and from approximately 10% at the start of the year.

  60% confidence

• March Core PCE (excluding food and energy) rose to 3.2% year over year, up from 2.9% in February.

  60% confidence

• March headline PCE rose to 3.5% year over year, up from 2.8% in February, largely driven by energy costs.

  60% confidence

• The 30-year Treasury yield topped the 5% threshold during the week of May 15, 2026.

  60% confidence

• The FOMC will entertain rate hikes only in a world of bad choices: either allowing inflation to increase further and become entrenched, or accepting the risk that a policy adjustment could prove macroeconomically destabilizing.

  60% confidence

• The April PCE inflation report due May 28 will remain elevated and reinforce expectations that the Fed keeps the benchmark Federal Funds Rate higher for longer.

  60% confidence

• The Federal Open Market Committee is likely to strongly prefer a long-term hold stance to rate hikes in 2026.

  60% confidence

• If the Fed begins hiking rates later in 2026 under new Chair Kevin Warsh, this would create downside risk to BNP Paribas's otherwise optimistic economic outlook.

  60% confidence

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