IMF Sees U.S. Inflation Returning to 2% in Mid-2028

The IMF expects U.S. inflation to return to its 2% target in mid-2028, spokesperson Julie Kozack said. In June, the fund had expected inflation to reach the target around mid-2027.

Kozack said headline inflation remains above target, partly because of a commodity price shock caused by the war in the Middle East and persistently high services inflation. She said the IMF does not believe rising labor costs are behind recent inflationary pressures.

The IMF considers a restrictive Federal Reserve policy stance necessary to support disinflation, Kozack said. She also voiced support for the Fed’s focus on price stability and readiness to act to bring inflation down.

Kozack said energy price shocks and rapid growth in AI investment are both shaping the global economy. The energy shock is weighing on growth while AI investment is supporting it, she said, but both are adding to inflationary pressures. Changes in the AI investment boom could therefore affect inflation.

She said valuations remain generally high in some markets and could be exposed to a reassessment of expectations for the long-term profitability of AI and related investments. The IMF is monitoring these valuations and other potential financial stability risks, including cyber risks and market movements.