In an updated forecast, Fed officials now see core PCE inflation jumping to 3.1% by the end of the year from the current 2.5% rate in April. This is much higher than the 2.8% core rate forecast in March.

Faced with a blurry forecast for the U.S. economy, the Federal continued its pattern of keeping interest rates at their current levels.

Federal Reserve officials expect inflation to worsen in the coming months but they still foresee two interest rate cuts by the end of this year, the same as they projected in March.