FOMC Summary of Economic Projections:
Federal Funds Rate
- 2026: 3.375% (exp. 3.375%, prev. 3.4%)
- 2027: 3.125% (exp. 3.125%, prev. 3.1%)
- 2028: 3.125% (exp. 3.125%, prev. 3.1%)
- Longer Run: 3.125% (exp. 3.125%, prev. 3.0%)
Unemployment Rate
- 2026: 4.4% (exp. 4.4%, prev. 4.4%)
- 2027: 4.3% (exp. 4.2%, prev. 4.2%)
- 2028: 4.2% (exp. 4.2%, prev. 4.2%)
- Longer Run: 4.2% (exp. 4.2%, prev. 4.2%)
PCE
- 2026: 2.7% (exp. 2.6%, prev. 2.4%)
- 2027: 2.2% (exp. 2.2%, prev. 2.1%)
- 2028: 2.0% (exp. 2.0%, prev. 2.0%)
- Longer Run: 2.0% (exp. 2.0%, prev. 2.0%)
Core PCE
- 2026: 2.7% (exp. 2.6%, prev. 2.5%)
- 2027: 2.2% (exp. 2.2%, prev. 2.1%)
- 2028: 2.0% (exp. 2.0%, prev. 2.0%)
GDP
- 2026: 2.4% (exp. 2.2%, prev. 2.3%)
- 2027: 2.3% (exp. 2.0%, prev. 2.0%)
- 2028: 2.1% (exp. 1.9%, prev. 1.9%)
- Longer Run: 2.0% (exp. 1.8%, prev. 1.8%)
Context
The latest FOMC Summary of Economic Projections indicates stable expectations for the Federal Funds Rate and unemployment, with slight upward revisions for PCE inflation and GDP growth. This suggests the Fed is maintaining a cautious yet optimistic outlook, which could reinforce the current interest rate trajectory, impacting the USD and fixed income markets in the short to medium term.
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