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FED: Economic Projections, Rate Outlook More Hawkish

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A more hawkish set of projections than expected on the Dot Plot, particularly for the higher 3.4% median in 2026 (looks like above any expectations we'd seen), suggesting that the Fed is very cautious about the neutral rate. 

  •  Econ forecasts basically in line except for the PCE projections in 2025, pretty significant increases for both core and headline, with core and headline not seeing returning to 2% until 2027 vs 2026 in the prior set.

  • The 50bp of cuts seen in 2025 (vs 100bp last time, 75bp consensus) appears to reflect this more hawkish outlook.

     

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A more hawkish set of projections than expected on the Dot Plot, particularly for the higher 3.4% median in 2026 (looks like above any expectations we'd seen), suggesting that the Fed is very cautious about the neutral rate. 

  •  Econ forecasts basically in line except for the PCE projections in 2025, pretty significant increases for both core and headline, with core and headline not seeing returning to 2% until 2027 vs 2026 in the prior set.

  • The 50bp of cuts seen in 2025 (vs 100bp last time, 75bp consensus) appears to reflect this more hawkish outlook.