{"id":273901,"date":"2026-06-22T13:20:14","date_gmt":"2026-06-22T13:20:14","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ny\/273901\/"},"modified":"2026-06-22T13:20:14","modified_gmt":"2026-06-22T13:20:14","slug":"the-new-york-fed-dsge-model-forecast-june-2026","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ny\/273901\/","title":{"rendered":"The New York Fed DSGE Model Forecast\u2014June\u00a02026"},"content":{"rendered":"

\n Marco Del Negro, Keshav Dogra, Elena Elbarmi, Donggyu Lee, and Michael Pham<\/p>\n

\t\"decorative<\/p>\n

This post presents an update of the economic forecasts generated by the Federal Reserve Bank of New York\u2019s dynamic stochastic general equilibrium (DSGE) model. We describe very briefly our forecast and its change since\u202fMarch 2026<\/a>.\u00a0To summarize,\u00a0inflation forecasts are higher in 2026 than predicted in March.\u00a0Projections for the short-run real natural rate of interest (r*) increased slightly\u00a0relative\u00a0to March.<\/p>\n

Note:\u00a0The\u00a0DSGE model forecast is not an official New York Fed forecast, but only an input to the Research staff\u2019s overall forecasting process. For more information about the model and variables discussed here, see\u00a0our\u202fDSGE model Q & A<\/a>.\u00a0<\/p>\n

The New York Fed DSGE model forecasts use data released through\u00a02026:Q1, augmented for\u00a02026:Q2 with median forecasts for real GDP growth and core PCE inflation from the May\u00a0release of the Philadelphia Fed\u00a0Survey of Professional Forecasters<\/a>\u00a0(SPF),\u00a0as well as the yields on 10-year Treasury securities and Baa corporate bonds based on\u00a02026:Q2 averages up to May 27.\u00a0Starting in\u00a02021:Q4, the expected federal funds rate (FFR) between one and six quarters into the future is restricted to equal the corresponding median point forecast from the latest available\u00a0Survey of Market Expectations<\/a>\u00a0(SME) in the corresponding quarter. For the current projection, this is the\u00a0April\u00a0SME.\u00a0<\/p>\n

The SPF expects core inflation in\u00a02026:Q2 to be more than 1 percent higher in annualized terms than the DSGE model expected in March.\u00a0In light of\u00a0this forecast miss (if the SPF turns out to be correct), the model revised its inflation forecasts upward in 2026, from 2.4\u00a0to 3.1 percent. The DSGE attributes the forecast error to mark-up shocks, which may capture the effects of both tariff and energy shocks. The model views the impact of these shocks as vanishing by the end of the\u00a0year\u00a0and\u00a0hence the inflation forecasts are\u00a0largely unchanged\u00a0throughout the rest of the forecast horizon.\u00a0<\/p>\n

On the output front,\u00a0the DSGE\u00a0is more upbeat than it was in March, although its projections\u00a0remain\u00a0somewhat pessimistic. The model does see the\u00a0positive growth\u00a0effect of the AI-related boom in investment\u2014positive MEI (marginal efficiency of investment) shocks push output,\u00a0up especially in 2026\u2014but also believes that the adverse markup shocks will push down growth in the future.\u00a0<\/p>\n

The model\u2019s predictions for the short-run real natural rate of interest (r*) increased by\u00a00.1 percentage point relative to March (2.0, 1.7, and 1.3 percent for 2026, 2027, and 2028, versus 1.9, 1.6, and 1.3\u00a0percent), partly reflecting higher total factor productivity (TFP).\u00a0<\/p>\n

Forecast Comparison<\/p>\n

Forecast Period2026202720282029Date\u00a0of\u00a0ForecastJun 26Mar 26Jun 26Mar 26Jun 26Mar 26Jun 26Mar 26GDP\u00a0growth
(Q4\/Q4)1.2
\u00a0(-2.2,\u00a04.5)\u00a01.0
\u00a0(-3.4,\u00a05.6)\u00a00.2
\u00a0(-5.0,\u00a05.2)\u00a00.2
\u00a0(-5.1,\u00a05.4)\u00a00.7
\u00a0(-4.8,\u00a06.0)\u00a00.8
\u00a0(-4.7,\u00a06.3)\u00a01.5
\u00a0(-4.1,\u00a06.9)\u00a01.3
\u00a0(-4.4,\u00a06.9)\u00a0Core\u00a0PCE\u00a0inflation
(Q4\/Q4)3.1
\u00a0(2.5,\u00a03.7)\u00a02.5
\u00a0(1.6,\u00a03.3)\u00a01.8
\u00a0(0.7,\u00a03.0)\u00a02.0
\u00a0(0.8,\u00a03.2)\u00a01.6
\u00a0(0.4,\u00a02.9)\u00a01.9
\u00a0(0.6,\u00a03.2)\u00a01.7
\u00a0(0.4,\u00a03.0)\u00a02.0
\u00a0(0.6,\u00a03.3)\u00a0Real\u00a0natural\u00a0rate\u00a0of\u00a0interest
(Q4)2.0
\u00a0(0.7,\u00a03.3)\u00a01.9
\u00a0(0.6,\u00a03.3)\u00a01.7
\u00a0(0.2,\u00a03.1)\u00a01.6
\u00a0(0.0,\u00a03.1)\u00a01.3
\u00a0(-0.3,\u00a02.9)\u00a01.2
\u00a0(-0.4,\u00a02.8)\u00a01.1
\u00a0(-0.5,\u00a02.8)\u00a01.0
\u00a0(-0.6,\u00a02.7)\u00a0Source: Authors\u2019 calculations.
Notes: This table lists the forecasts of output growth, core PCE inflation, and the real natural rate of interest from the June 2026 and March 2026 forecasts. The numbers outside parentheses are the mean forecasts, and the numbers in parentheses are the 68 percent bands.<\/p>\n

Forecasts of Output Growth<\/p>\n

\"Two<\/a>Source: Authors\u2019 calculations.
Notes: These two panels depict output growth. In the top panel, the black line indicates actual data and the red line shows the model forecasts. The shaded areas mark the uncertainty associated with our forecasts at 50, 60, 70, 80, and 90 percent probability intervals. In the bottom panel, the blue line shows the current forecast (quarter-to-quarter, annualized), and the gray line shows the March 2026 forecast.<\/p>\n

Forecasts of Inflation<\/p>\n

\"Two<\/a>Source: Authors\u2019 calculations.
Notes: These two panels depict core personal consumption expenditures (PCE) inflation. In the top panel, the black line indicates actual data and the red line shows the model forecasts. The shaded areas mark the uncertainty associated with our forecasts at 50, 60, 70, 80, and 90 percent probability intervals. In the bottom panel, the blue line shows the current forecast (quarter-to-quarter, annualized), and the gray line shows the March 2026 forecast.<\/p>\n

Real Natural Rate of Interest<\/p>\n

\"Line<\/a>Source: Authors\u2019 calculations.
Notes: The black line shows the model\u2019s mean estimate of the real natural rate of interest; the red line shows the model forecast of the real natural rate. The shaded area marks the uncertainty associated with the forecasts at 50, 60, 70, 80, and 90 percent probability intervals.<\/p>\n

\"Photo<\/p>\n

Marco Del Negro<\/a> is an economic research advisor in the Federal Reserve Bank of New York\u2019s Research and Statistics Group.<\/p>\n

\"Portrait<\/p>\n

Keshav Dogra<\/a> is an economic research advisor in the Federal Reserve Bank of New York\u2019s Research and Statistics Group.<\/p>\n

\"Elena<\/p>\n

Elena Elbarmi\u00a0is a\u00a0research analyst in the\u00a0Federal Reserve Bank of New York\u2019s\u00a0Research and Statistics Group.<\/p>\n

\"Photo:<\/p>\n

Donggyu Lee<\/a> is a research economist in the Federal Reserve Bank of New York\u2019s Research and Statistics Group.<\/p>\n

\"Michael<\/p>\n

Michael Pham\u00a0is a\u00a0research analyst\u00a0in the\u00a0Federal Reserve Bank of New York\u2019s\u00a0Research and Statistics Group.\u00a0\u00a0<\/p>\n

\n How to cite this post:
Marco Del Negro, Keshav Dogra, Elena Elbarmi, Donggyu Lee, and Michael Pham, \u201cThe New York Fed DSGE Model Forecast\u2014June\u00a02026,\u201d Federal Reserve Bank of New York Liberty Street Economics, June 22, 2026, https:\/\/doi.org\/10.59576\/lse.20260622<\/a>
\n BibTeX: View<\/a> | Download\n <\/p>\n

@article{DelNegroDograElbarmiLeePham2026,
\n author={Del Negro, Marco and Dogra, Keshav and Elbarmi, Elena and Lee, Donggyu and Pham, Michael},
\n title={The New York Fed DSGE Model Forecast\u2014June\u00a02026},
\n journal={Liberty Street Economics},
\n note={Liberty Street Economics Blog},
\n number={June 22},
\n year={2026},
\n url={https:\/\/doi.org\/10.59576\/lse.20260622}
\n}<\/p>\n

Disclaimer
The views expressed in this post are those of the author(s) and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author(s).<\/p>\n","protected":false},"excerpt":{"rendered":"Marco Del Negro, Keshav Dogra, Elena Elbarmi, Donggyu Lee, and Michael Pham This post presents an update of…\n","protected":false},"author":2,"featured_media":273902,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[105399,23719,6841,6079,105400,9,11,10,105401],"class_list":["post-273901","post","type-post","status-publish","format-standard","has-post-thumbnail","category-new-york","tag-dsge","tag-gdp","tag-growth","tag-inflation","tag-macroeconomic-forecast","tag-new-york","tag-new-york-headlines","tag-new-york-news","tag-real-natural-rate-of-interest"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/273901","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/comments?post=273901"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/273901\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media\/273902"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media?parent=273901"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/categories?post=273901"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/tags?post=273901"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}