Photo: U.S. Government / Wikimedia Commons (Public domain)
Fed sees rates holding at 4.1% through 2027 in new projections
Fed officials raised their rate projections sharply while also forecasting stronger growth, lower unemployment and slightly higher inflation.
The Federal Reserve’s latest projections point to interest rates staying higher for longer, with officials now seeing the federal funds rate ending both 2026 and 2027 at 4.1%.
The September Summary of Economic Projections shows the median rate forecast rising sharply from June, when policymakers projected 3.8% for 2026 and 3.6% for 2027. Officials now see the rate declining to 3.9% in 2028 and 3.6% in 2029, with a longer run estimate of 3.2%.
The updated projections also show a slightly stronger growth outlook. Median real GDP growth is now expected at 2.3% in 2026 and 2.4% in 2027, compared with June estimates of 2.2% and 2.3%. Growth is then projected at 2.2% in 2028 and 2.1% in 2029.
At the same time, officials lowered their unemployment forecasts. The median projection now stands at 4.1% for every year from 2026 through 2029, compared with June projections of 4.3% in 2026 and 2027 and 4.2% in 2028 and 2029.
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Inflation projections moved slightly higher. The Fed now expects PCE inflation of 3.7% in 2026, up from 3.6% in June, before falling to 2.3% in 2027, 2.1% in 2028 and 2.0% in 2029.
Core PCE inflation is projected at 3.4% in 2026, up from 3.3% previously, followed by 2.5% in 2027, 2.2% in 2028 and 2.0% in 2029.
The projections suggest policymakers expect stronger growth and lower unemployment than they did in June, while also seeing inflation remaining somewhat more persistent and interest rates staying elevated for longer.