The Federal Reserve lowered its 2025 growth outlook. It indicated only gradual interest rate cuts in the coming years, according to the Summary of Economic Projections released following the June 17–18 Federal Open Market Committee (FOMC) meeting. GDP growth The median forecast for real gross domestic product (GDP) growth was revised down to 1.4 per cent for 2025, compared to 1.7 per cent projected in March. Growth is expected to rise to 1.6 per cent in 2026 and 1.8 per cent in 2027, aligning with the Fed's longer-run estimate of 1.8 per cent. Unemployment Meanwhile, the unemployment rate is now expected to edge up to 4.5 per cent in both 2025 and 2026 before dipping slightly to 4.0 per cent in 2027. The longer-run estimate remains at 4.0 to 4.3 per cent. Inflation Inflation projections were adjusted upward. The headline Personal Consumption Expenditures (PCE) inflation rate is now expected to be 3.0 per cent in 2025, up from 2.7 per cent in the March forecast. It is projected to fall to 2.4 per cent in 2026 and reach 2.1 per cent by 2027. Core PCE inflation, which excludes food and energy, is forecast at 3.1 per cent for 2025 and 2.4 per cent for 2026, before moderating to 2.1 per cent in 2027. Federal funds rate Policymakers maintained their median projection for the federal funds rate at 3.9 per cent for 2025, unchanged from March. The rate is expected to decline to 3.6 per cent in 2026 and 3.4 per cent in 2027, with a longer-run neutral level seen at 3.0 per cent. Attribution: Amwal Al Ghad English Subediting: M. S. Salama Download
