Wells Fargo Investment Institute now expects the U.S. Federal Reserve to raise interest rates by 25 basis points within the year, reversing its earlier forecast that rates would stay unchanged. The change comes as core inflation remains above the central bank’s 2% target, reinforcing the risk of tighter monetary policy. The Fed’s target range is currently 3.50% to 3.75%, with the effective rate at 3.63% as of mid-August 2026. Market pricing has also moved to reflect a greater chance of a rate increase by the September 2026 meeting, aligning with Wells Fargo’s updated view. Investors are now watching the Sept. 15-16, 2026 Federal Open Market Committee, or FOMC (Fed rate-setting panel), meeting, along with signals from Federal Reserve Chair Jerome Powell and other FOMC members and upcoming CPI (Consumer Price Index) inflation data for evidence on whether inflation is re-accelerating enough to justify a hike.