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Fed forecasts only one rate cut in 2026, a more conservative outlook than expected
The Federal Reserve is projecting only one rate cut in 2026, less than expected, according to its median projection. The central bank’s so-called dot plot, which anonymously shows 19 individual members’ expectations, indicates a median estimate of 3.4% for the federal funds rate at the end of 2026. That compares to a median estimate of 3.6% for the end of this year, following two expected cuts on top of Wednesday’s reduction. A single quarter-point reduction next year is significantly more conservative than current market pricing. Traders are currently pricing in two to three more rate cuts next year, according ... (full story)
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NotAtrader
Sep 17, 2025 1:26pm
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The September 2025 FOMC meeting will conclude on Wednesday, September 16 at 2:00 ET. Fed Chairman Powell’s press conference will begin at 2:30 ET. As of writing, Fed Funds futures traders are pricing in 96% odds of a 25bps interest rate cut per CME FedWatch (with an outside chance of a 50bps “double” rate cut). Assuming the Federal Reserve cuts interest ...
The Federal Reserve Open Market Committee cut the fed funds policy target range by 25bps as widely expected and priced. Rates rallied at first upon seeing the dot plot of the Committee’s future rate moves, but then quickly sold off on a combination of rethinking the projections and in response to remarks during the press conference. Overall, the effect was ...
Recent indicators suggest that growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen. In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4 to 4‑1/4 percent. In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective. FOMC STATEMENT COMPARE: pic.twitter.com/6gTcajtaKz One dissenter: Voting against this action was Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/2 percentage point at this meeting. FED SAYS DOWNSIDE RISKS TO EMPLOYMENT HAVE RISEN
