Fed's Revision: Lower Interest Rates Expected Amid Rising Unemployment

U.S. central bankers foresee lowering interest rates to 4.25%-4.50% by year-end due to inflation nearing a 2% goal and rising unemployment. Projections by the Federal Reserve suggest multiple rate cuts through 2025, signaling an easing monetary policy. Dissent exists among policymakers regarding the extent of rate cuts needed.

U.S. central bankers are now expecting to reduce interest rates to a range of 4.25%-4.50% by year-end, a more significant cut than previously anticipated in June. This adjustment comes as inflation trends toward their 2% target and unemployment increases.

The Federal Reserve's projections, released post the Sept. 17-18 meeting, suggest quarter-point rate cuts at each of the last two meetings this year. By the end of 2025, the policy rate is expected to be 3.4%, indicating further cuts next year. Rates are projected to stabilize at 2.9% by 2026 and 2027.

Fed Governor Michelle Bowman expressed dissent, advocating for a smaller cut. Projections show differing views among policymakers on the necessity and extent of rate cuts, reflecting a range of opinions within the Federal Reserve.

(With inputs from agencies.)