The bank now expects a 25-basis-point Fed rate increase this year due to persistent inflation pressures from energy and tariffs.
Wells Fargo has revised its inflation outlook for 2026 and 2027, now projecting a Federal Reserve rate hike of 25 basis points before year-end. The shift follows earlier expectations of steady rates through 2027, driven by higher energy costs, new tariffs, and supply chain disruptions.
Previously, the bank forecasted inflation at 3.4% for 2024, easing in 2027, with the Fed funds rate holding at 3.50% to 3.75%. The updated projections reflect concerns that inflation relief may stall, contradicting earlier optimism about cooling price pressures.
The change contrasts with Wells Fargo’s bullish S&P 500 target of 7,950, raised in June, which assumed easing inflation and stable rates. Markets may reassess Fed policy expectations as inflation risks persist.