Reasoning
With the Federal funds target range at 3.50 to 3.75 percent and projections indicating a likely increase in the rate to 3.8 percent by year-end, the environment suggests potential upward pressure on core CPI. Recent economic conditions, including the erased rate cutting bias, imply that inflation may remain elevated, making it plausible for core CPI to exceed 3.5% in the latter months of 2026.Key uncertainty
A sudden economic shock or significant changes in energy prices could dramatically affect inflation and potentially lower core CPI.