Today, Fed also published its economic projections, which contain material changes from its September projections.
The change in real GDP for 2024 is expected at 2.5%, compared to the previous expectation of 2.0%. The forecast for 2025 was increased from 2.0% to 2.1%.
Unemployment Rate projection for 2024 declined from 4.4% to 4.2%, while the next year’s estimate was lowered from 4.4% to 4.3%.
PCE inflation expectations were increased from 2.3% to 2.4% for 2024. The forecast revision for 2025 was more significant, as PCE inflation projection was raised from 2.1% to 2.5%.
Importantly, the federal funds rate projection for 2025 was increased from 3.4% to 3.9%. The 2026 estimate was also increased from 2.9% to 3.4%.
Overall, the Fed expects stronger economy, higher inflation and higher interest rates compared to its September projections.