Skip to navigationSkip to main contentSkip to right columnADVERTISEMENTJames Brumley, The Motley FoolSat, June 20, 2026 at 3:36 PM GMT+2 4 min readInterest rates are likely headed higher later this year. That's the chief takeaway from the Federal Reserve's most recent public assessment of the United States' economy, anyway.In its projection of key economic numbers released on Wednesday, the Federal Open Market Committee (FOMC) indicated it expects the federal funds rate to reach 3.8% (a range of 3.75% and 4%, to be specific) versus the current target range of 3.5% to 3.75%, up from March's full-year projection of 3.4% (3.25% to 3.5%). And data from interest rate futures exchange CME says the market's now making the same bet, with that quarter-point rate hike expected more than not by the end of September.Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »Image source: Getty Images.Higher inflation, but the economy chugs alongInflation isn't expected to abate in the near future either. The same FOMC projection, in fact, suggests 2026's inflation rate is apt to roll in at 3.6%, up from March's expectation of 2.7%. That's why interest rates are expected to inch higher by the end of the year -- to combat inflation.The funny thing is, uncomfortably high prices of ... well, everything don't seem to be taking a serious toll on the economy. As the Federal Reserve's statement on its decision to leave the fed funds rate untouched this month explains:Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little.As long as this remains the case amid the current inflationary headwind, the domestic economy should come out the other side on a reasonably solid bullish footing. And this increasingly looks like the outcome we'll see sooner than later.There is relief that relief is possible in 2027The FOMC also expects inflation to cool quite a bit in 2027, and then fall a little more -- to 2% -- by the end of 2028. The fed funds rate should fall during this two-year time frame as well, to a more palatable average target of 3.4% ... although the futures market isn't quite making that same bet just yet. Other interest rates, like mortgage rates, will then fall accordingly.More important to investors than the specifics of the Fed's assessment of the economy and how future inflation will impact future interest rates, this optimism tacitly says it's safe enough to remain in the market.Terms and Privacy PolicyEU DSA contactPrivacy & Cookie SettingsMore Info