Wells Fargo Investment Institute sharply raised its 2027 interest-rate outlook, warning that persistent inflation could force the Federal Reserve to keep policy tighter for longer. The institute now expects the federal funds rate to finish 2027 between 4.75% and 5.00%, up substantially from its previous 4.00% to 4.25% forecast. It also lifted its year-end 2027 forecast for the 10-year Treasury yield to 5.25% to 5.75%, compared with an earlier 4.50% to 5.00% range, and raised its 30-year yield forecast to 5.50% to 6.00% from 5.25% to 5.75%. The revisions reflect Wells Fargo's view that inflation will remain firmer than previously expected, requiring a more forceful response from the Fed, while the institute kept its 2027 inflation forecast at 3%. Wells Fargo also lowered its unemployment forecast, pointing to structural limits on labor-force growth, a combination that could leave policymakers with less room to cut rates aggressively even if economic growth softens.
Wells Fargo & CompanyWells Fargo Investment Institute raised its 2027 fed funds and Treasury yield forecasts on firmer inflation, implying tighter-for-longer Fed policy
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