<div id="readability-page-1">Inflation forecast jumps: Cleveland Fed projects May inflation at 4.18%, with Q2 CPI annualizing at 6.89%, the highest in three years. War impact on prices: Iran war’s closure of the Strait of Hormuz has sent oil prices soaring, pushing U.S. gas prices up at the fastest rate in 30 years. Rate cut hopes fade: The surge has removed chances of 2026 rate cuts, with potential hikes possible under new Fed Chair Kevin Warsh.</div>

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<p>Cleveland Fed projects May inflation at 4.18%, with Q2 CPI annualizing at 6.89%, the highest in three years. The Iran war's impact has led to soaring oil prices, causing U.S. gas prices to rise rapidly. As a result, hopes for rate cuts in 2026 have diminished, with potential hikes anticipated under new Fed Chair Kevin Warsh.</p>

- The Cleveland Fed projects May inflation at 4.18%, with the Q2 CPI annualizing at 6.89%, marking a three-year high.  
- The Iran war has closed the Strait of Hormuz, causing oil prices to rise significantly and leading to the fastest increase in U.S. gas prices in 30 years.  
- This inflation surge diminishes hopes for rate cuts in 2026, with potential interest rate hikes anticipated under the new Fed Chair Kevin Warsh.

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Fed's May inflation forecast spikes, rate cuts unlikely in 2026