Fed Dot Plot Reveals Shallow Easing Path For 2026; Experts Say Don't Expect 'Many More Reductions' As Split Of Dots Is 'Something To Behold' - Invesco QQQ Trust, Series 1 (NASDAQ:QQQ), SPDR S&P 500 (A

Core Viewpoint - The Federal Reserve's latest economic projections indicate a limited path for interest rate cuts in 2026, reflecting a resilient economy and persistent inflation [1][2]. Economic Projections - The median forecast for the federal funds rate is expected to decline to 3.4% by the end of 2026, which is only a 0.2 percentage point decrease from the 3.6% projected for the end of 2025 [2]. - The Fed has revised its outlook for real GDP growth in 2026 upward to 1.8%, indicating a stronger economy than previously anticipated [4]. - The projection for PCE inflation has been increased to 2.6%, which supports the Fed's decision to maintain higher interest rates for an extended period [5]. Internal Divisions - There is significant disagreement within the Federal Open Market Committee (FOMC) regarding the future path of interest rates, with some members advocating for rate hikes while others suggest substantial cuts [6]. - The wide range of opinions among FOMC members is evident in the 2025 projections, contributing to a cautious outlook for 2026 [5][6]. Market Reactions - Following the Fed's policy decision, the stock market exhibited mixed results, with the S&P 500 and Nasdaq 100 indices declining, while the Dow Jones index increased [8]. - The SPDR S&P 500 ETF Trust (SPY) fell by 0.12% to $659.18, and the Invesco QQQ Trust ETF (QQQ) decreased by 0.20% to $590.00 [8].