Fed projects slightly higher inflation after first rate hike in three years

The Federal Reserve said its latest projections now point to slightly higher inflation this year, with core personal consumption expenditures expected to end 2026 at 3.4%, up from the 3.3% forecast made in June. The July core PCE reading was 3.3% on an annual basis. Following Wednesday's rate increase, the median forecast from FOMC members implies one more hike this year, ending at 4.1%. Twelve members expect another increase, four see two more hikes, and two think rates should remain unchanged. Chairman Warsh did not give a personal rate forecast in the updated projections, consistent with his approach at the June release.