Fed estimates a further increase in interest rates by the end of the year

Dwith the two days of meeting behind closed doors, the members of the Federal Open Market Committee (FOMC) have updated the forecasts for the US economy: they expect 2026 to end annual inflation of 3.7%, according to the median of their projections, against the 3.6% estimated at the June meeting.

They also consider that the principal rates should be between 4% and 4.25% at the end of the year, a level one above that announced today, after the decision to rise by 25 basis points. The median was 4.1% for the end of this year and for 2027, the Fed leader said.

“Inflation has been above the mandate for five years,” Warsh said, pointing out that “it has been very high for a long time.”.

Kevin Warsh, who refused to comment on a possible reaction by the US President, Donald Trump, to the rise in interest rates, said that the Fed cannot influence any specific price, but can try to prevent the rises “to extend to the economy.”.

“It was our decision” to raise the fees, said the president of the Fed, still excluding any influence from the markets.

The Fed decided to increase interest rates by 25 basis points for the interval between 3.75% and 4%, after a two-day meeting, it announced, in a statement.

According to the note, the FOMC pointed out that inflation remains “high” and above the Fed target of 2%, having taken the decision unanimously.

The Fed did not increase the principal fees, which guide the costs of loans since the summer of 2023.

Inflation has hovered over central bank interest rate policy throughout the year, driven by the US war with Iran and its impact on world oil supply.