Jerome Powell’s Grim Inflation Outlook Is at Odds With Markets

Falling prices of energy, automobiles and houses and soft readings on consumer prices have made investors borderline euphoric over the outlook for inflation. 

The Federal Reserve is having none of it.

After raising interest rates by the expected half-percentage point on Wednesday, Fed Chairman Jerome Powell and his colleagues laid out an economic and interest-rate forecast premised on a painful, drawn-out battle with inflation completely at odds with the markets.

How the Fed's Inflation Forecasts​ChangedFed officials' median year-end projection of​core inflation*Source: Federal Reserve via Derek Tang, LHMeyer,*12-month change in price index of personal​consumption expenditures,...