FOMC cuts interest rates for 3rd consecutive time

However, the dotplot predicts only one cut in 2026.

Federal Open Market Committee (FOMC) The federal funds rate was cut by 25 basis points. Wednesday for the third straight meeting.

The current exchange rate is 3.50%~3.75% range – It is the lowest since September 2022.

As was the case at recent meetings, the committee was divided: 3 votes against. FOMC members Stephen Miran voted against, calling for a 50 basis point cut, while Austan Goolsbee and Jeffrey Schmid voted against.I prefer no interest rate cuts.

The FOMC also released a report along with the interest rate cut. Quarterly outlook summary or dot plot. The dot plot showed no change from the projections the committee gave last quarter.

Specifically, The dotplot shows that the committee expects just one rate cut in 2026. The median is 3.44% One more time in 2027 The median is 3.1%. The average rate in 2028 is also 3.1%, with no change for that year. While this is only a prediction and not a confirmation, investors may have been hoping for an acknowledgment that there will be more cuts over the next three years.

The dot plot is probably because: Stocks were mixed following the announcement at 2pm ET.. The Nasdaq took the biggest hit, falling 70 points, while the S&P 500 gained only 9 points. The Dow Jones index rose about 290 points.

Increased uncertainty

The FOMC said in a statement: Downside risks to employment have increasedInflation has risen and uncertainty about the economic outlook remains high.

“The Committee decided to lower the target range for the federal funds rate by one quarter of a percentage point to 3.50 to 3.75 percent, supporting the target and taking into account changes in the balance of risk,” the FOMC said.

The committee also said it would begin purchasing short-term Treasury securities as needed to maintain sufficient reserve supply.

that The FOMC forecasts that the labor market and prices will improve in 2026 and 2027.This may partly explain the slowing pace of interest rate cuts.

dot plot project PCE inflation expected to be 2.5% in 202This is lower than the September forecast of 2.6%. The committee projects inflation to be 2.1% in 2027.

that Unemployment rate is expected to be 4.4% in 2026Same as previous prediction. However, it is expected to fall to 4.2% in 2027 from 4.3% in September.

Perhaps more importantly, The FOMC projects the economy will grow 2.3% in 2026.This was revised upward from the original 1.8% growth forecast. It is also expected to grow by 2.0% in 2027 and 1.9% in 2028, both of which are higher than previous estimates.