The Federal Reserve releases its July monetary policy report: Inflation rises again, and the mid-point of the year-end interest rate forecast is raised to 3.8%

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Wu Shuo learned that the Federal Reserve submitted a July monetary policy report to Congress, saying that US inflation rose again this year. In May, the overall PCE price index rose 4.1% year over year, while core PCE increased 3.4% year over year. The rise was mainly driven by higher tariffs, energy price increases triggered by the conflict in the Middle East, and growing demand for AI-related high-tech products. The US labor market remained generally stable, with the June unemployment rate at 4.2%, and first-quarter real GDP annualized growth of 2.1%. Since the beginning of the year, the FOMC has kept the target range for the federal funds rate at 3.5% to 3.75%, and once again emphasized achieving price stability. The report also included the June economic projections: the median forecast by Federal Reserve officials for 2026 PCE inflation and core PCE inflation were 3.6% and 3.3%, respectively, while the median year-end federal funds rate forecast was 3.8%, higher than the 3.4% forecast made in March.
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MevBreakRoom
· 10h ago
The median interest rate is 3.8%. Does that mean the rate can be cut at most once this year, or not cut at all? The crypto market’s liquidity expectations will need to be repriced again.
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PickingUpCatsInTheContract
· 11h ago
Tariffs + Middle East energy + AI demand—these three buffs stacked at full strength; inflation can’t come down. In 2026, it’s still 3.6%, and a soft landing is up in the air.
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NonceCollector
· 11h ago
The unemployment rate of 4.2% is pretty stable, and GDP is also up 2.1%. The Fed has the confidence to hold the line—it's just that our risk assets are going to feel uncomfortable for a while.
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