Fed SEP: Growth Lower, Inflation Higher, Rates Higher for Longer
- 2026 GDP growth seen at 2.2%, down from 2.4% in March
- Long-run GDP growth forecast unchanged at 2.0%
- 2026 PCE inflation seen at 3.6%, up sharply from 2.7% in March
- 2026 core PCE inflation seen at 3.3%, up from 2.7% in March
- 2026 unemployment rate seen at 4.3%, versus 4.4% in March
- PCE inflation not expected to return to the 2.0% target until 2028, unchanged from March projections
- Fed notes inflation remains elevated relative to its target, partly reflecting supply shocks, including in the energy sector
- Dot plot implies 25bps of rate hikes in 2026, followed by 25bps of rate cuts in 2027 and another 25bps of cuts in 2028