Federal Reserve Unlikely to Cut Rates in 2026 as U.S. PCE Inflation Forecast to Stay Above 3.5%, CICC Says

According to China International Capital (CICC), the U.S. Federal Reserve is unlikely to cut interest rates for the remainder of 2026, as inflation remains elevated above the central bank’s 2% target. CICC’s latest report forecasts U.S. PCE inflation will stay above 3.5% for the full year, with core PCE projected above 3%, both significantly higher than the Fed’s policy goal. The outlook reflects recent U.S. inflation data beating expectations, stable labor market conditions, and ongoing energy price risks amid stalled U.S.-Iran peace negotiations and continued restrictions in the Strait of Hormuz.