The Federal Reserve has revised its economic projections, signaling fewer interest rate cuts in 2025 and a slightly higher inflation outlook.
The Fed eral 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.
It also 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%
FED INTEREST RATES INFLATION ECONOMIC PROJECTION GDP
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