At its September meeting today, the Fed lowered its policy rate by 25 basis points to a range of 4.00-4.25%. The bank announced that it anticipates two additional rate cuts in 2025.
The new economic projections included notable revisions to the FED’s interest rate, inflation, growth and unemployment expectations:
Interest Rate Projections (Year-End)
- 2025: 3.675% (previous 3.875%)
- 2026: 3.375% (unchanged)
- 2027: 3.125% (previous 3.375%)
- 2028: 3.125% (first estimate)
- Long-term: 3.125% (previously 3.00%)
Inflation (PCE)
- 2025: 3.0% (unchanged)
- 2026: 2.6% (previous 2.4%)
- 2027: 2.1% (unchanged)
- 2028: 2.0% (first estimate)
Core Inflation (Core PCE)
- 2025: 3.1% (unchanged)
- 2026: 2.6% (previous 2.4%)
- 2027: 2.1% (previous 2.3%)
- 2028: 2.0% (first estimate)
Growth (GDP)
- 2025: 1.6% (previous 1.4%)
- 2026: 1.8% (previous 1.6%)
- 2027: 1.9% (previous 1.8%)
- 2028: 1.8% (first estimate)
Unemployment Rate
- 2025: 4.5% (unchanged)
- 2026: 4.4% (previous 4.5%)
- 2027: 4.3% (previous 4.4%)
- 2028: 4.2% (first estimate)
Speaking after the Fed’s decision to cut interest rates by 25 basis points today, Chairman Jerome Powell admitted that this interest rate cut may not have a meaningful impact.
However, Trump’s newly appointed Stephen Ira Miran was the only member to call for a 50 basis point rate cut. Other members wanted rates to remain steady.
*This is not investment advice.