The FOMC meeting resulting in the Fed reduced the federal funds rate by 50 basis points to 4.75%-5.00%, signaling the start of a rate-cutting cycle. This decision reflects increased confidence in achieving the 2% inflation target. GDP growth projections for 2024-2026 remain around 2%, while unemployment is expected to peak at 4.4%. Core inflation forecasts for 2024 and 2025 were lowered, supporting the Fed’s efforts toward a soft landing.
GDP Growth:
2024: Revised upwards from 1.9% (June) to 2.0%.
2025: Unchanged at 1.8%.
2026: Remains at 1.8%.
Inflation (PCE):
2024: Increased from 2.2% (June) to 2.3%.
2025: Unchanged at 2.1%.
2026: Still expected to be 2.0%.
Federal Funds Rate:
2024: Increased from 4.6% (June) to 4.4%.
2025: Lowered from 3.4% to 3.6%.
2026: Raised slightly from 2.9% to 3.0%.
These updates show a slight shift towards stronger growth and higher inflation expectations, with minor adjustments to the federal funds rate.
Full Details: ttps://www.federalreserve.gov/monetarypolicy/fomcprojtabl20240918.htm