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MNI: CBO Expects Fed To Start Cuts Mid-Year

(MNI) WASHINGTON
USCentral Bank NewsPolicy NewsHomepageFederal ReserveBriefStoryRegionNorth America

The Congressional Budget Office is projecting the Federal Reserve will respond to slowing inflation and rising unemployment by starting to lower the federal funds rate in the second quarter, with the effective fed funds rate averaging 5.1% for the year, a tenth higher than its 2023 average, then falling to annual averages of 4.1% in 2025 and 3.3% in 2026.

In CBO’s projections, overall PCE inflation is seen easing to 2.1% around the end of the year. The updated projections from the nonpartisan budget referee agency Wednesday also included real GDP growth steadily slowing over the next ten years to an annual average of 1.9% in the early 2030s.

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The Congressional Budget Office is projecting the Federal Reserve will respond to slowing inflation and rising unemployment by starting to lower the federal funds rate in the second quarter, with the effective fed funds rate averaging 5.1% for the year, a tenth higher than its 2023 average, then falling to annual averages of 4.1% in 2025 and 3.3% in 2026.

In CBO’s projections, overall PCE inflation is seen easing to 2.1% around the end of the year. The updated projections from the nonpartisan budget referee agency Wednesday also included real GDP growth steadily slowing over the next ten years to an annual average of 1.9% in the early 2030s.

Keep reading...Show less