The U.S. Federal Reserve, after cutting the benchmark rate by 25 basis points on Wednesday, also released its September Summary of Economic Projections (SEP), which indicated further easing in the pipeline.
According to the Fed’s dot plot, the median projection points to an additional 50 basis points of rate cuts in 2025, with the federal funds rate seen at 3.6% by year-end 2025, lower than the 3.9% forecast in June.
Officials also projected rates at 3.4% in 2026 and 3.1% in 2027, while keeping the longer-run median funds rate unchanged at 3%.
On growth and inflation, the Fed sees GDP at 1.6% in 2025 and 1.8% in 2026, with inflation still described as “somewhat elevated.” The unemployment rate is projected at 4.5% in 2025 and 4.4% in 2026.
While the decision to cut rates was nearly unanimous, the updated forecasts highlight a cautious easing path, as officials balance concerns over slowing growth with still-persistent price pressures.
