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November 02, 2026
Partner, Chief Economist
A macroeconomic model based on the historical relationship between interest rates, GDP and inflation suggests the Fed would need to raise the Fed funds rate by about 275 basis points, from roughly 4% today to 6.75% by the end of 2027, to bring CPI back to its 2% target. Inflation would not reach target until 2Q27, even with aggressive hikes.
The bottom line is that the Fed may be further from its inflation goal than the market currently expects.
Note: The path of the Fed funds rate to rise for CPI to fall to 2%. Sources: Bloomberg SHOK, Apollo Chief Economist
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