This year, it will be difficult to cut interest rates again; the greater the interest rate divergence, the longer the rates remain unchanged. The Federal Reserve has entered a policy pause period.

BlockBeats News, May 8 — In the Federal Reserve’s interest rate decision, greater disagreement often leans toward maintaining the current rate for a longer period. At the recent April 2026 FOMC meeting, the Fed recorded its largest split since 1992, with an 8-4 voting result, deciding to keep the federal funds rate target range unchanged at 3.5%-3.75%. This marks the third consecutive pause. One official supported an immediate 25 basis point cut, while the other three agreed to hold rates steady but retained dovish language in their dissent statements. There are deep disagreements within the Fed regarding inflation risks, the labor market, and the neutral interest rate level.

As disagreements among Fed members about the economic outlook widen, reaching a consensus on rate adjustments becomes more difficult, which tends to reinforce inertia and prolong the current policy stance, waiting for more data to resolve uncertainties. After the federal funds rate approaches the neutral zone, such disagreements directly increase the likelihood of rates remaining unchanged for a longer period rather than quickly shifting, and the market is expected to extend its waiting period.

According to CME FedWatch data, the outlook for the Fed’s rate terminal in 2026 is as follows: the probability that the Fed will not cut rates at all for the rest of the year is 72.6%, the probability of a total 25 basis point cut is 8.5%, a 50 basis point cut is 0.3%, a total 25 basis point hike is 17.6%, and a 50 basis point hike is 1%.

Additionally, the probability of a 25 basis point rate cut at the next meeting in June is 4.1%.