Fed Still Sees Interest Rate Cuts Coming, Despite Uncertainty | Global News Avenue

The Fed’s DOT plot shows that officials have cut tax rates twice in 2025, despite the economy’s more pessimistic view of the economy.

Economic forecasts released along with the Fed’s interest rate decision showed on Wednesday that central banks still forecast a 2025 drop rate. But a growing number of Fed officials have withdrawn their rate cut forecasts and their perceptions of unemployment, economic growth and inflation have worsened.

“There are some revisions to the forecasts of FOMC members’Scattered“There are forecasts for growth and inflation to move in the opposite direction,” said Whitney Watson, co-investment officer at Goldman Sachs Asset Management.

Why investors follow the “point chart”

Investors are paying attention “Document” Get the latest snapshot Federal Open Market Committee (FOMC) idea. These points anonymously track the location of 19 FOMC members Believe in the Fed’s funding rate It will be later this year, next year and other moments in the future. The chart will be released after it is held approximately every quarter.

Economists consider median results to show the path forward for interest rates. Lower interest rates lead to more business and investment activities. Investors are also monitoring the Fed’s forecasts on other economic indicators, such as GDP and inflation rate.

Fed Chairman Jerome Powell said in a press conference with reporters that the forecast “at present, given the considerable uncertainty, there are currently existing challenging exercises.”

Fed Funding Rate 2025

What it says: Most Fed voters have cuts twice this year from the FOMC, with nine of the voters expected to drop to 3.75% to 4.0%. However, four members did not predict any reduction rate this year, while the other four expected only one 25 Basic point cut.

What it means: The Federal Reserve continues Its December forecastThis lists the likelihood of two 25 benchmark points lower in 2025. However, unlike December, when there is a huge difference between members, this dot chart shows that some members are backing on their forecasts of lowering interest rates. Only two members predict that the Fed will further lower tax rates this year.

These forecasts are mainly in line with market expectations. According to CME Group’s FedWatch tool, investors didn’t lower their tax rates until June meetings, with most people cutting another tax rate in 2025. Economists also widely expect to cut two to three speeds from the Fed this year.

Fed funding interest rates in 2026 and beyond

What it says: Additionally, most Fed officials saw two additional tax cuts in 2026, bringing that rate to 3.25% to 3.5%. Entering 2027, most Fed officials predict at least one tax rate reduction, with a few seeing federal funds rate dropping below 3%.

What it means: Interest rates should be close to a long-term forecast of about 3%, but there is not much certainty in the position. More than a third of members believe that long-term interest rates continue to over 3%, while fewer rates drop to as low as 2.5%. Forecasts suggest Fed officials are less confident that interest rates will move than they did last time they drew the road.

unemployment rate

What it says: Federal Reserve officials believe the unemployment rate worsens in 2025, with most people saying it rising to 4.4% to 4.5%. The unemployment rate in February was 4.1%. In December’s forecast, most central banks predict unemployment rates will be more modest.

What it means: Higher unemployment rates may help stimulate the Fed to lower interest rates, but it may also indicate that the economy is in a recession.