Federal Reserve Raises Inflation Forecast to 2.6% and Long-term Neutral Rate to 2.8%

Jun 12, 2024, 06:01 PM

The Federal Reserve has raised its inflation forecast to 2.6% from 2.4%. Additionally, the Fed has increased its median long-term neutral rate projection to 2.8% from 2.6%, marking the highest projection since Q1 2019 and the most significant increase since the Fed began publishing these forecasts nine years ago. Despite some easing over the past year, inflation remains elevated. The Fed does not expect it will be appropriate to reduce the policy target range until there is greater confidence that inflation is moving sustainably toward 2%.