PNC Economics Research Economic Roundup 27 July 2026

PNC Economics Research 27 July 2026

Weekly Economic Roundup PNC Economics

Headlines Gus Faucher  Markets continue to view no change in the fed funds rate as the most-likely outcome at this week's FOMC meeting, but conviction around that outcome Jay Hawkins remains unusually low. The market is still pricing roughly a one-in-three

chance of a rate hike, making it one of the most uncertain FOMC decisions Ershang Liang of the last decade and the third closest to a directional "coin flip" in market pricing ahead of an FOMC meeting. Brian LeBlanc  Chair Warsh has said he prefers “messier” FOMC meetings, and this week’s

meeting may provide an early look at what that means in practice. Given Rayhan Momin their hawkish remarks ahead of the communications blackout period, we expect Regional Fed Presidents Hammack and Logan to dissent in favor of rate hikes, even as our baseline outlook remains that a majority of the Isfar Munir Committee will vote to leave the rate unchanged. We don’t expect Chair

Warsh to say much about the outlook in his press conference. Kurt Rankin  Last week's data calendar was light, with attention focused on rising, albeit volatile, oil prices and a new slate of tariffs that replaced the expiring Section 122 measures. As we argued last week, the new tariffs appear largely designed to replace the expiring tariffs, resulting in little change to the effective tariff rate through year-end.

 In contrast, this week is packed with significant data releases, including personal income, ECI, the first estimate of Q2 GDP, and core PCE for June. Together, this data will help provide a clearer picture on the outlook for second half of 2026.

PNC Economics Research 27 July 2026

Another hawkish hold, though goods in the last few inflation reports, FOMC Committee members will likely have some confidence uncertainty remains high that they can ride out elevated oil prices while the remaining tariff-related passthroughs fade. Markets continue to view no change in the fed funds rate as the most-likely outcome at this week's FOMC Fed Governor Waller had suggested he would support meeting, but conviction around that outcome remains an imminent hike had the latest CPI print come in hot unusually low. The market is pricing roughly a one-in- – which it did not. Furthermore, the labor market does three chance of a rate hike at the July meeting, not show obvious signs of tightness; labor market making it one of the most uncertain FOMC decisions tightness is a threat to non-housing services inflation, of the last decade and the third closest to a and the current slack should give the Fed more directional "coin flip" in market pricing ahead of an confidence that supercore inflation (core services FOMC meeting. inflation excluding shelter) will not re-accelerate in the back half of the year. Such uncertainty was rarely seen under former Chair Powell, but may become a more common feature of Financial market inflation expectations remain the Warsh Fed. Unlike Powell, Warsh has repeatedly steady. These factors will all help make the majority of eschewed the use of forward guidance as a tool for the FOMC comfortable in waiting out the next few setting monetary policy, preferring "messier months of data before making decisions on changes meetings" and a Federal Reserve that says less. to the policy rate. We expect dissents, however, from Presidents Logan and Hammack given their pre- Figure 1: Directional uncertainty in market pricing, 5 blackout period commentary. business days before FOMC meeting (%) 50% Mar '23 Another reason we expect the Committee to remain 45% Jun '23 patient is that the recently hawkish market pricing is 40% Jul '26 35% itself tightening financial conditions. We suspect that 30% Warsh may message a hold hawkishly by focusing on 25% the commitment to price stability in the (recently 20% 15% scheduled) post-meeting press conference. Such 10% Jun '26 messaging, combined with potential dissents, could 5% further raise near-term forward rates to a more 0% Sources: Bloomberg, PNC restrictive level without the Fed actually delivering on Note: Directional uncertainty defined as 100 minus market-implied odds of a hike/cut (capped at…