The Fed Isn't Getting the Economy It Expected

Federal Reserve policy makers’ projections for inflation this year appear to be too high, while their GDP projections seem too low.
The central bank’s policy makers will need to update the economic projections to reflect the current situation, as underlying inflation is looking cooler than expected and the economy is looking stronger.
An environment with lower inflation and higher growth has implications for interest rates. While policy makers are expected to keep rates unchanged at their meeting this week, rate cuts are even less likely now.
At their June meeting, policy makers projected that their preferred measure of consumer prices would be 3.2% higher in the fourth quarter of this year.
The Fed’s updated projections will likely show one last quarter-percentage-point hike to the central bank’s target range on interest rates by the end of the year, but a reacceleration in core inflation could change this outlook.