Woofun AI reports that nearly half of Federal Reserve policymakers have abandoned the view that holding borrowing costs steady will suffice to return inflation to the 2% target, citing the surge in oil prices following the Iran war. The latest dot plot indicates a fundamental shift in internal debate, moving from timing rate cuts to serious consideration of rate hikes, with some officials convinced that tightening is necessary.

Forecasts released on Wednesday reveal heightened pessimism regarding inflation since March. The median projection places the PCE price index at 3.6% by year-end, up from 2.7% in March, while core PCE is expected to rise 3.3% year-on-year compared to the previous 2.7% estimate.

Concurrently, the unemployment rate is projected at 4.3%, matching May's actual reading and falling below March's 4.4% forecast, suggesting policymakers believe the labor market remains robust and does not require monetary support.