AI Summary
A report from the Federal Reserve revealed updated economic forecasts from FOMC members and regional Fed presidents, showing an upward revision to this year’s rate-cut outlook.
The report, released Wednesday following the committee’s meeting, indicated policymakers raised their expectations for US economic growth in 2025, while keeping their forecasts for inflation and unemployment unchanged.
Policymakers project two additional interest rate cuts of 25 basis points (bps) each this year, which is 25 bps more than their June outlook.
This came after the Fed cut its benchmark interest rates today for the first time in 2025, by 25 bps, bringing the target range down to 4%–4.25%.
|
Median Fed Forecasts for Key US Economic Indicators (%) |
||||
|
Indicator |
Projection Date |
2025 |
2026 |
2027 |
|
Real GDP Growth |
Sept |
1.6 |
1.8 |
1.9 |
|
June |
1.4 |
1.6 |
1.8 |
|
|
Unemployment Rate |
Sept |
4.5 |
4.4 |
4.3 |
|
June |
4.5 |
4.5 |
4.4 |
|
|
PCE Inflation |
Sept |
3.0 |
2.6 |
2.1 |
|
June |
3.0 |
2.4 |
2.1 |
|
|
Core PCE Inflation |
Sept |
3.1 |
2.6 |
2.1 |
|
June |
3.1 |
2.4 |
2.1 |
|
|
Interest Rate |
Sept |
3.6 |
3.4 |
3.1 |
|
June |
3.9 |
3.6 |
3.4 |
|
These forecasts reflect policymakers’ expectations for year-over-year changes in key economic indicators between Q4 of the reference year and Q4 of the prior year.
The US unemployment rate rose to 4.3% in August, the highest level in nearly four years. Meanwhile, the personal consumption expenditure (PCE) inflation stood at 2.9% in July, with the core PCE reading at 2.6%.
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