US Fed Maintains 2026 Rate-Cut Forecast

(MENAFN) The US Federal Reserve continues to forecast a single policy rate reduction in 2026, remaining consistent with its earlier prediction, according to the central bank's median projections released Wednesday.

The Fed's "dot plot," which anonymously reflects the expectations of 19 members, displayed a median projection of 3.4% for the federal funds rate by the end of 2026.

This figure is unchanged from the central bank's previous quarterly projections.

Looking ahead to 2027, the Fed anticipates that the terminal rate will reach 3.1%, suggesting one additional rate decrease. The dot plot also indicated that the rate is expected to remain stable in 2028.

Regarding economic growth, the committee raised its September forecast by 0.5 percentage points to 2.3%, based on the collective estimate for GDP in 2026. Despite this, officials continue to expect inflation to stay above the 2% target through 2028.

On the inflation front, prices remain persistently elevated. The most recent data available for September showed an annual rate of 2.8%, according to the Fed's preferred measure. While this is considerably lower than peaks seen in previous years, it still exceeds the central bank's 2% target.

On Wednesday, the Fed lowered its benchmark federal funds rate by 25 basis points to a 3.5% - 3.75% target range, in line with market expectations.

This marks the third rate cut in 2025, following a period in which the rate remained unchanged across five consecutive meetings prior to the September reduction.

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