The Fed sees only two rate cuts in 2025, fewer than previously projected

The Fed sees only two rate cuts in 2025, fewer than previously projected


U.S. Federal Reserve Chair Jerome Powell speaks during a press conference following a two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, U.S., November 7, 2024. 
Annabelle Gordon | Reuters

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 their benchmark lending rate falling to 3.9% by the end of 2025, equivalent to a target range of 3.75% to 4%.The Fed had previously projected four quarter-point cuts, or a full percentage point reduction, in 2025, at a meeting in September.

At the Fed’s last policy meeting of the year on Wednesday , the committee cut its overnight borrowing rate to a target range of 4.25%-4.5%.

A total of 14 of 19 officials penciled in two quarter-point rate cuts or less in 2025. Only five members projected more than two rate cuts next year.

Assuming quarter-point increments, officials are indicating two more cuts in 2026 and another in 2027. Over the longer term, the committee sees the “neutral” funds rate at 3%, 0.1 percentage point higher than the September update, a level that has gradually drifted higher this year. 

Here are the Fed’s latest targets from 19 FOMC members, both voters and nonvoters:

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 2.4% and 2.8%, respectively, 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 in September. However, in the following years, the officials expect GDP to slow down to its long-term projection of 1.8%. 

As for unemployment rate, the Fed lowered its estimate to 4.2% from 4.4% previously.

— CNBC’s Jeff Cox contributed reporting.



Source

Stocks making the biggest moves midday: Hershey, Chemours, Fair Isaac, Sunrun & more
Finance

Stocks making the biggest moves midday: Hershey, Chemours, Fair Isaac, Sunrun & more

Check out the companies making the biggest moves midday: Hershey — The candy company slid more than 3% following news that Wendy’s CEO Kirk Tanner will take the helm at Hershey , effective Aug. 18. He will replace Michele Buck, who has been with the company for the past two decades and has spent eight […]

Read More
‘Big Short’ Trader Steve Eisman breaks down one reason investors shouldn’t worry about deficits
Finance

‘Big Short’ Trader Steve Eisman breaks down one reason investors shouldn’t worry about deficits

Steve Eisman, the investor who called the subprime mortgage crisis, said fears of the massive size of the federal budget deficit may be overblown. President Donald Trump’s One Big Beautiful Bill Act signed last week added to investor concerns about the fiscal trajectory of the country and future government borrowing. The bill includes trillions of dollars in […]

Read More
Robinhood CEO downplays OpenAI concerns on tokenized stock structure
Finance

Robinhood CEO downplays OpenAI concerns on tokenized stock structure

Key Points In a CNBC interview Tuesday, Robinhood CEO Vlad Tenev defended the company’s OpenAI and SpaceX stock tokens, given concerns over how they’re structured. Last week, OpenAI issued a warning that Robinhood’s stock tokens do not represent equity in the company. “In and of itself, I don’t think it’s entirely relevant that it’s not […]

Read More