IMF sees US inflation rising in 2026 before easing in 2027

The International Monetary Fund expects overall inflation in the United States to rise to 3.6% in 2026, then fall to 2.8% in 2027.

It expects underlying inflation, which filters out more volatile food and fuel prices, to return to the Federal Reserve’s 2% target only by mid-2028.

The IMF says higher energy costs linked to conflicts in the Middle East are a main reason for the rise, while investment in artificial intelligence is also adding to demand for energy, construction and skilled workers.

Its central forecast assumes the Strait of Hormuz reopens in March 2027 and conditions largely return to their pre-war state by October that year.

In one model scenario, there is about a 30% chance that US inflation will exceed 4% in 2027; this is a modeled probability, not a forecast.

The IMF also projects US economic growth of 2.3% in both 2026 and 2027.

It says central banks should respond if inflation spreads to expectations or wages, while much weaker growth could allow gradual interest-rate cuts.