The U.S. Federal Reserve has forecast that more interest rate cuts are coming in the months ahead after initially lowering its benchmark rate by 50-basis points.
In an update to its outlook on interest rates, known as the “dot plot,” the U.S. central bank said that it expects rates to be reduced another 50-basis points by the end of 2024.
The Federal Reserve has two remaining interest rate decisions scheduled for this year, on Nov. 7 and Dec.18.
Futures markets are currently betting that the Fed, as the central bank is commonly known, will lower interest rates by 25-basis points at each of its two remaining policy meetings this year.
Looking further ahead, the new forecast calls for an additional full percentage point interest rate reduction in 2025, followed by a 50-basis point cut in 2026.
The benchmark Federal Funds Rate now sits in a range 4.75% to 5% after the central bank lowered interest rates by 50-basis points on Sept. 18, its first rate cut since the Covid-19 pandemic began four years ago.
Also in the new forecast, the Federal Reserve raised its expectation for the U.S. unemployment rate this year to 4.4% from 4% previously.
And, the central bank lowered its inflation outlook, saying it now expects the U.S. inflation rate to end the year at an annualized 2.3%, down from a previous forecast of 2.6%.
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