Fed's Cautious Approach: Rate Cuts and Inflation Projections in Focus

The Federal Reserve has issued new projections forecasting two quarter-point interest-rate cuts next year amid rising inflation. Policymakers project inflation at 2.4% for this year and 2.5% by 2025. They anticipate stronger growth and lower unemployment, with the benchmark lending rate ending in a 3.75%-4.00% range by 2025.

The Federal Reserve issued fresh projections on Wednesday, indicating two quarter-point interest-rate cuts for next year amidst escalating inflation rates. This prediction aligns with the Fed's 'wait-and-see' approach expected as Donald Trump commences his second term.

Policymakers anticipate inflation hitting 2.4% by year-end and 2.5% by 2025. Despite stronger economic growth and lower unemployment forecasts for the upcoming year than previously anticipated, concerns regarding inflation persist, suggesting a cautious approach to rate cuts in the coming year.

Analysts predict the benchmark lending rate to conclude at 3.75%-4.00% by 2025. These projections, highlighting individual policymakers' perspectives rather than a unified consensus, reveal a cautious yet adaptable stance postulated amid economic uncertainties.

(With inputs from agencies.)