Fed signals 2 more cuts in 2025, raises GDP forecast for the year

Core Insights - The Federal Reserve's latest projections indicate two additional rate cuts in 2025, following a recent quarter-point cut, bringing the benchmark rate to a range of 3.5%-3.75% by year-end [1][2] - The Fed's recent decision marks the first rate cut of the year, lowering the benchmark rate to a range of 4%-4.25% [2] - Economic growth projections have been raised, while inflation and unemployment forecasts remain steady, although downside risks to employment have increased [3] Rate Projections - The Fed's dot plot suggests a decline in the fed funds rate to 3.6% this year, down from a previous projection of 3.9% [4] - Markets had anticipated two to three rate cuts in 2025, with the Fed having already lowered rates by a full percentage point in 2024 [5] - Officials also project one additional rate cut in 2026, consistent with previous forecasts [5] Divergence Among Officials - There is a notable division among FOMC officials regarding the near-term outlook, with 18 officials predicting at least one rate cut in 2025, and one projecting as many as six cuts [6] - Only one FOMC member anticipated no change in rates this year, a decrease from seven in June, indicating a more dovish stance [6] - Fed Chair Jerome Powell acknowledged the wide range of views among officials, describing the current situation as "highly unusual" [7]