Federal Reserve officials raised their median projections for US economic growth in March while also marking up their near-term inflation forecasts, according to the Summary of Economic Projections released after the Federal Open Market Committee’s March 17-18 meeting.
The updated projections show policymakers expect real GDP to grow 2.4 per cent in 2026, up from 2.3 per cent in the December forecast, while the median estimate for 2027 was raised to 2.3 per cent from 2.0 per cent, and the 2028 forecast was lifted to 2.1 per cent from 1.9 per cent.
The labour-market outlook changed only modestly. Federal Reserve officials left the median unemployment rate projection for 2026 unchanged at 4.4 per cent, raised the 2027 estimate slightly to 4.3 per cent from 4.2 per cent, and kept the 2028 and longer-run projections at 4.2 per cent. The longer-run growth estimate was also revised up to 2.0 per cent from 1.8 per cent.
Inflation projections, however, moved higher. The median forecast for headline personal consumption expenditures inflation in 2026 rose to 2.7 per cent from 2.4 per cent in December, while the 2027 estimate increased to 2.2 per cent from 2.1 per cent, and the 2028 projection remained at 2.0 per cent.
Core PCE inflation, which excludes food and energy, was also revised upward, with the median forecast rising to 2.7 per cent for 2026 from 2.5 per cent and to 2.2 per cent for 2027 from 2.1 per cent, while the 2028 estimate held at 2.0 per cent.
The projections, therefore, suggest that Federal Reserve officials now see a somewhat stronger growth outlook alongside slower progress on inflation than they did in December. Even so, the median policy-rate path was little changed. The projected federal funds rate remained at 3.4 per cent for 2026 and 3.1 per cent for both 2027 and 2028, while the longer-run rate was nudged up to 3.1 per cent from 3 per cent.
That combination indicates policymakers did not make a major change to their expected path for interest rates despite the firmer growth and inflation forecasts. The release also stressed that substantial uncertainty surrounds the outlook.
The Federal Reserve’s table on historical forecast errors showed average error ranges for 2026 of plus or minus 1.5 percentage points for GDP growth, 0.8 percentage points for unemployment, 1.4 percentage points for consumer prices, and 0.9 percentage points for short-term interest rates.
Overall, the March projections point to an economy that Federal Reserve officials expect to keep expanding at a solid pace, with unemployment remaining broadly stable and inflation returning to 2 per cent more gradually over the next two years.
The central message from the updated projections is not a dramatic shift in the rate outlook. It’s a combination of stronger expected growth and higher near-term inflation than policymakers forecast at the end of 2025.