Market Analysis: Traders to Closely Monitor Fed Rate Cut Expectations
Before the Federal Reserve releases its second forward-looking dot plot for 2025, it is necessary to review the latest forecasts from officials since March. At that meeting, officials projected that GDP growth would slow to 1.7% this year, the unemployment rate would rise to 4.4%, and the Fed’s preferred PCE inflation gauge would show prices rising by 2.7% in 2025, as tariffs slow economic growth and drive up costs. Perhaps most importantly, the median expectation among officials was for the Fed to cut rates twice during the remainder of 2025, followed by two more cuts in 2026. When the new dot plot is released at 2 a.m. tonight, the rate cut forecasts will be among the first data points to attract investors’ attention.
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