The Federal Reserve sees inflation rising again to top 3% this year amid the uncertainty around President Donald Trump’s trade policies and intensifying geopolitical risk.
Federal Open Market Committee participants expect the core personal consumption expenditures price index, which excludes food and energy, to increase at a 3.1% rate in 2025, higher than their prior forecast of 2.8% in March.
The PCE price index was at 2.1% in April, matching its lowest level since February 2021. Excluding food and energy, core PCE stood at 2.5%. The latter is a gauge Fed officials believe to be a better measure of longer-term trends.
Central bank officials also see further slowing in economic growth, projecting gross domestic project expanding just 1.4% this year. In March, they expected a 1.7% pace in GDP growth.
Fed Chair Jerome Powell said the recent uptick in inflation expectations could be tied to tariffs.
