The Federal Reserve lowered its projections for interest rate cuts in 2025, anticipating only two reductions instead of the previously forecasted four. The central bank also revised its inflation and GDP growth forecasts upward.
The Federal Reserve on Wednesday projected only two quarter-point rate cuts in 2025, fewer than previously forecast, according to the central bank's medium projection for interest rates. The so-called dot-plot, which indicates individual members' expectations for rates, showed officials see interest rates falling to 3.9% by the end of 2025, equivalent to a target range of 3.75% to 4%.The Fed had projected four quarter-point cuts, or a full percentage point reduction in 2025, in September.
The Fed cut its overnight borrowing rate to a target range of 4.25%-4.5%. The projections also showed slightly higher expectations for inflation. Projections for headline and core inflation according to the Fed's preferred gauge were hiked to respective estimates of 2.4% and 2.8%, compared to the September estimates of 2.3% and 2.6%. The committee also pushed up its projection for full-year gross domestic product growth to 2.5%, half a percentage point higher than September. However, in the following years, the officials expect GDP to slow down to its long-term projection of 1.8%
Federal Reserve Interest Rates Inflation GDP Growth Economic Forecast
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