OECD Upgrades US Growth Forecast, Expects One More Fed Rate Hike

The Organization for Economic Co-operation and Development (OECD) has upgraded its outlook for U.S. economic growth, but also expects the Federal Reserve to raise interest rates once more before the end of 2026.

In its September Interim Economic Outlook, the OECD projects one additional Fed rate increase in the fourth quarter (Q4), after which it expects the federal funds target range to remain at 4% to 4.25% through 2027.

The call is notable because the OECD simultaneously became more optimistic about U.S. growth, forecasting GDP growth of 2.2% in 2026 and 2.1% in 2027, up 0.2 and 0.3 percentage points from its June outlook.

The OECD credits 'strong underlying momentum' and further expansion in AI investment for supporting U.S. activity, but notes that households face growing pressure due to eroding purchasing power, slower labor-force growth, and declining household savings.