The Fed cuts rates: Less future adjustments  

The Federal Reserve announced a rate cut but adjusted its projections to show less cuts in the coming years. 

In a decision anticipated by markets, the Federal Reserve reduced its benchmark rate to a range of 4.25%-4.5%, returning to levels not seen since December 2022. However, the Fed’s message was clear: a more gradual path of adjustments is expected in the coming years. 

According to the “dot plot”, projections indicate only two additional cuts in 2025, half of what was expected in September. Two more adjustments are projected for 2026, and one more in 2027, with a long-term “neutral” rate estimated at 3%, reflecting a slight upward adjustment. 

Not all Committee members agreed: Beth Hammack, president of the Cleveland Fed, voted against it, continuing the line of dissent that began in November. This marks the first time since 2005 that such a level of opposition has been recorded among the governors. 

The Fed reaffirmed its commitment to monitoring economic data and adjusting monetary policy if necessary. This cautious approach will be key to continuing to balance growth and inflation in the months ahead. 

FED indicators update (December vs. September) 

Source: Federal Reserve