07:00 PM BST, United States - Interest Rate Projection - 1st Yr (Q3):
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actual 3.4%; previous 3.6%;
07:00 PM BST, United States - Interest Rate Projection - 2nd Yr (Q3):
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actual 3.1%; previous 3.4%;
07:00 PM BST, United States - Fed Interest Rate Decision for December:
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actual 4.25%; forecast 4.25%; previous 4.50%;
The Fed cut the target range for the federal funds rate by 25 bps to 4.00%–4.25%, citing moderating growth, slower job gains, a slightly higher (but still low) unemployment rate, and inflation that has moved up and remains somewhat elevated. Policymakers note uncertainty around the outlook is still high and that downside risks to employment have increased, prompting a recalibration to better balance the dual mandate of maximum employment and 2% inflation.
Looking ahead, the Committee remains data-dependent: further moves will hinge on incoming data, the evolving outlook, and the balance of risks. Quantitative tightening continues—the Fed will keep reducing holdings of Treasuries, agency debt, and MBS. The statement reiterates a strong commitment to returning inflation to 2% while supporting maximum employment, and signals readiness to adjust policy if risks threaten those goals.
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Vote: Powell, Williams, Barr, Bowman, Collins, Cook, Goolsbee, Jefferson, Musalem, Schmid, Waller for; Miran dissented, preferring a -50 bps cut.
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The statement now says “inflation has moved up and remains somewhat elevated,” instead of the previous “inflation remains somewhat elevated.”
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Fed notes slower hiring and swaps out “unemployment remains low” for wording that the jobless rate has “edged up.”
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The median dot points to two additional cuts this year, with end-2026 and longer-run projections unchanged.
Summary of Economic Projections
The Fed sees slightly stronger growth, slightly lower unemployment, and a bit more stubborn inflation in 2026, yet projects a more accommodative policy path than in June. Fed is confident disinflation resumes toward 2% by 2028 without needing rates as high as previously thought.
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Growth (real GDP): 1.6% (2025) => 1.8% (2026) => 1.9% (2027) => 1.8% (2028); longer-run 1.8%.
Change vs. June: Up a touch in 2025–27 (June: 1.4%, 1.6%, 1.8%), signaling slightly firmer growth. -
Unemployment rate: 4.5% => 4.4% => 4.3% => 4.2%; longer-run 4.2%.
Change vs. June: Path nudged lower in 2026–27 (from 4.5%/4.4%), implying a bit less slack. -
Policy rate (Fed funds “dots”): 3.6% (2025), 3.4% (2026), 3.1% (2027–28); longer-run 3.0%.
Change vs. June: Lower dots through 2027 (June: 3.9%, 3.6%, 3.4%), consistent with ~50 bps more cuts in 2025 and a slightly easier path thereafter; long-run neutral unchanged.
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