Fed inflation forecast worsens
- The Federal Reserve's April inflation forecast was updated and now looks worse for the stock‑market outlook. - Commentary described the revision as close to a 'worst‑case' scenario for Wall Street. - Sticky inflation and renewed supply shocks raise stagflation risk, complicating central‑bank reaction functions and market pricing. (fool.com)
A Federal Reserve inflation gauge for April moved higher again, cutting against Wall Street’s hopes for near-term rate relief. (clevelandfed.org) The Federal Reserve Bank of Cleveland’s daily nowcast, updated April 17, estimated April consumer inflation at 3.58% year over year and April personal consumption expenditures inflation at 3.61%. Its April monthly estimates were 0.46% for the Consumer Price Index and 0.39% for personal consumption expenditures. (clevelandfed.org) The Federal Reserve’s official Summary of Economic Projections is released only four times a year, at the March, June, September, and December policy meetings. That means April changes are coming from real-time tracking tools and speeches, not a new quarterly Fed forecast table. (federalreserve.gov) Fed Governor Christopher Waller said April 17 that two developments reshaped the outlook before the March 17-18 meeting: the conflict with Iran, which pushed energy prices higher, and a sharp drop in immigration that slowed labor-force growth. He said a prolonged supply disruption could have lasting effects on both inflation and U.S. growth. (federalreserve.gov) That mix is the basic stagflation problem: prices stay hot while growth slows. The Fed’s job gets harder because cutting rates can feed inflation, while holding rates high can weigh on hiring and spending. (federalreserve.gov) Gasoline prices show how the shock is reaching households. AAA listed the national average for regular gas at $4.042 a gallon on April 20, up from $3.912 a month earlier and $3.151 a year earlier. (aaa.com) The Cleveland Fed’s quarterly nowcast points in the same direction. On April 17, it estimated second-quarter 2026 inflation at a 5.28% annualized rate for CPI and 4.58% for personal consumption expenditures. (clevelandfed.org) Underlying inflation measures are still running above the Fed’s 2% goal even before April data are official. The Atlanta Fed’s dashboard, updated April 10, showed core personal consumption expenditures at 3.0% in March 2026 and its Sticky CPI measure at 3.0%, both above target-consistent levels. (atlantafed.org) Stocks have kept climbing anyway. The Motley Fool reported April 20 that the S&P 500 and Nasdaq Composite hit fresh highs last week, even as Cleveland Fed nowcasts pointed to faster April price growth. (fool.com) The next hard test is the official April inflation data and the Federal Open Market Committee’s June meeting. Until then, every uptick in the nowcasts makes the case for quick rate cuts harder to defend. (clevelandfed.org)
