Fed Officials Forecast One Additional Rate Hike in 2026
Federal Reserve policymakers anticipate one more interest rate increase this year, following a recent quarter-point hike that raised the target fed funds rate to 3.75%-4.00%. The projections indicate rates will remain unchanged through 2027 before gradually decreasing in subsequent years. Inflation expectations have been revised upward for both 2026 and beyond due to persistent price pressures, partly driven by rising energy costs linked to the Middle East conflict. The Fed's updated forecasts show a median inflation rate of 3.7% for this year using the PCE Price Index, up from June’s projection. Policymakers still aim to return inflation to their 2% target in 2029 but acknowledge current upside risks. The central bank also revised its long-run federal funds rate expectation upward to 3.2%. Growth and employment outlooks remain largely unchanged with GDP growth expected at 2.3% for this year, while the unemployment rate is projected to stay steady through 2029. The
