Wells Fargo Raises Inflation Forecast and Expects Fed to Hold Rates Through 2026
TLDR
- Wells Fargo has revised its inflation and interest rate forecasts upward for 2026 and 2027
- The bank now expects the Federal Reserve to hold rates at 3.50%-3.75% through year-end 2026
- Higher energy costs, tariffs, and supply-chain issues are driving the inflation outlook
- Chief economist Tom Porcelli says supply-driven inflation cannot be fixed by raising rates
- New Fed Chair Kevin Warsh is seen taking a cautious, wait-and-see approach on policy
Wells Fargo has updated its economic outlook, raising its forecasts for both inflation and interest rates. The bank now expects price pressures to stay elevated longer than it previously thought.
The revised outlook covers 2026 and 2027. Core inflation is expected to remain sticky, and the bank sees only limited progress on bringing prices down.
What Is Driving Inflation Higher
Three main factors are behind the upgraded forecasts: higher energy costs, new tariffs, and ongoing supply-chain problems.
These are supply-side issues, meaning they push prices up from the production side rather than from consumer demand. Wells Fargo chief economist Tom Porcelli has been clear that this type of inflation is not easily fixed by raising interest rates.
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