Analysts forecast a final interest rate reduction from the Federal Reserve this week, with a focus on 2025 expectations.
Fed's 2024 Rate Cut
The Federal Reserve is expected to reduce interest rates by a quarter point at its December 17-18 meeting, bringing the key benchmark rate to a range of 4.25%-4.50%. Economists indicate that the Fed will also adjust its 2025 projections following this move.
Inflation and Job Market Resilience
The labor market remains resilient, supporting consumer spending and economic growth, while inflation continues to persist at higher levels, not easing to the Fed's target of 2%. The US Bureau of Labor Statistics reported a 2.7% year-over-year increase in the Consumer Price Index for November.
2025 Outlook Divided
Fed officials remain divided on the 2025 outlook. Richmond Fed President Tom Barkin expresses optimism about inflation decreasing, while Loretta Mester is more cautious, suggesting revisions to the Fed's projections might be necessary.
The Federal Reserve continues to assess the economic landscape to balance inflation control with economic growth stability. Various factors, from inflation expectations to labor market conditions, play a crucial role in shaping future policy.
