Federal Reserve Projects Two Rate Cuts in 2025

The Federal Reserve’s official interest rate projections (Dot Plot) indicate the possibility of reducing interest rates by 50 basis points through two 25-basis-point cuts in 2025, bringing rates down to 4.0%.

The projections further suggest two additional 25-basis-point cuts in 2026, stabilizing rates at 3.5%.

Additionally, a further 50-basis-point reduction is anticipated in 2027, lowering rates to 3.0%.

In the long term, the projections point to the Federal Reserve maintaining interest rates at 3.0%, aligning with its inflation targets.

These forecasts are based on a vote among the 19 members of the Federal Open Market Committee.

The projections likely stem from the continued decline in inflation, alongside stable labor market conditions, sustained improvement in job growth, and a reduction in unemployment.