Federal Reserve Decision Summary
- The Federal Reserve cut interest rates by 25 basis points.
- The number of projected rate cuts for next year has been reduced from 4 to 2.
- Additional cuts are expected: 2 in 2026 and 1 in 2027.
- The long-run federal funds rate expectation has increased to 3%.

September Dot Plot

December Dot Plot
Key Details
- Dissent: Cleveland Fed President Beth Hammock preferred to leave rates unchanged.
- Committee Views:
- 10 members see 2 cuts next year
- 5 members see 3 or more cuts
- 3 members forecast 1 cut
- 1 member suggests leaving rates unchanged through 2025 and 2026
Economic Forecasts
- Inflation: Both PCE headline and core inflation forecasts have been revised upward.
- Headline inflation: 2.5% by end of next year (up from 2.1%)
- Core inflation: 2.5% by end of next year (up from 2.2%)
- Unemployment: Expected to be 4.3% at the end of next year.
- GDP Growth:
- 2024 end: 2.5% (up 0.5% from September forecast)
- 2026: 2.1% (indicating a significant slowdown)
Technical Note
- The Fed lowered the offering rate for overnight reverse repurchase agreements by 30 basis points to 4.25%.
Key points from Chair Powell's press conference:
Powell Speech Summary
Probabilities Comps as of Dec 18