Summary of Economic Projections: GDP lower, Inflation higher, Unemployment rate higher.
Summary of Economic Projections
Please consider the Fed’s Summary of Economic Projections, March 19, 2025.
In conjunction with the Federal Open Market Committee (FOMC) meeting held on March 18–19, 2025, meeting participants submitted their projections of the most likely outcomes for real gross domestic product (GDP) growth, the unemployment rate, and inflation for each year from 2025 to 2027 and over the longer run. Each participant’s projections were based on information available at the time of the meeting, together with her or his assessment of appropriate monetary policy—including a path for the federal funds rate and its longer-run value—and assumptions about other factors likely to affect economic outcomes. The longer-run projections represent each participant’s assessment of the value to which each variable would be expected to converge, over time, under appropriate monetary policy and in the absence of further shocks to the economy. “Appropriate monetary policy” is defined as the future path of policy that each participant deems most likely to foster outcomes for economic activity and inflation that best satisfy his or her individual interpretation of the statutory mandate to promote maximum employment and price stability.
Fed Holds Steady
In the FOMC Decision today, the Fed held rates steady.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty around the economic outlook has increased. The Committee is attentive to the risks to both sides of its dual mandate.
In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. Beginning in April, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25 billion to $5 billion. The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.
Target Rate Dot Plot 2025-03-19
The median interest rate for 2025 is ~4.0 percent.
That would imply one or two more cuts this year. [Correction from one]
Here is the FOMC Press Conference.
In the press conference Powell said a good part of the increase in its inflation forecast is due to tariffs.
“There may be a delay in further progress” on inflation.
“We are well positioned to wait for further clarity.”
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March 7, 2025: A Historical Look at Unemployment Rates Heading Into Recessions
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March 10, 2025: Trump and Secretary of Treasury Bessent Discuss the “Detox Recession”
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Caution the posted GDPNow numbers are incorrect. My chart is correct.
Addendum
The Fed always does what it wants. If necessary, it makes whatever excuses it needs to do what it wants.
This is in accordance with the Fed Uncertainty Principle.
For discussion, please see Fedthink! The Fed Is Incompetent by Design and Can’t Be Fixed
Addendum
The Fed always does what it wants. If necessary, it makes whatever excuses it needs to do what it wants.
This is in accordance with the Fed Uncertainty Principle.
For discussion, please see Fedthink! The Fed Is Incompetent by Design and Can’t Be Fixed
Totally agree with you. The fed is clueless and reminds me of 2018, bringing back “inflation is transitory” and should not impact 2026. Kick the can. Powell has become a typical bureaucrat with politics in the back of his mind.
Spoken like someone who never drives forward using the rearview mirror. Sheesh. LOL.
DeepShit AI understands the Fed better than u.
The humorous miracle…oh look, they project the long term inflation value of 2%, which, by the time it allegedly gets there, will have meant 7 years above “their target”. Who makes this crap up…oh. that’s right, the fed.
Gold is betting against the FED
Holding rates steady at the current time makes sense to me, raising or lowering both seem like a bad idea with the current level of uncertainty. However, backing off the roll-off of treasuries does not seem a good idea. I wonder what they are thinking here? The new roll off rate of 5 billion per month is practically negligible??
The Fed will slow the pace of decline of US security from $25B/M to $5B/M. The Fed might cut rate twice in 2025, instead of once. The Fed will cont to supply $35B/M mortgage security. (supply whom and why) ==> the Fed expect a correction. They prepare to counter it with QE and additional rate cuts.
MBS is collateral.
I think you have it backwards. They are continuing to roll off $35B/month of their MBS holdings, not supplying support for new MBS.
The cost of servicing the Federal Debt needs to be added to the FEDs rate setting policy.
And it will, but kept on the down low. Shhhhh.
I wonder if the upcoming $5000 DOGE dividend checks have anything to do with the Fed upping its inflation forecast?
“All roads lead to inflation.” Paul Tudor Jones
JPOW used the “T” word (Transitory) and he was called out for it on inflation, once again.
“It’s tariff turtles all the way down and inflation all the way up!”
See 2018. Read the Fed papers. Try
Did Trump impose tariffs on the world in 2018? If so, I missed that memo. April 2 is 14 days away. Tick…tock…tick…tock.
Not the whole world. But yes
QT and the Fed’s balance sheet. The Bernanke financial experiment dregs are settled on the bottom. Getting thru those will involve a mark to market shock and liquidity issues somewhere in the US, and repurchases by the Fed. Never mess with the balance sheet.
I guess the only way to prevent a deflationary depression is to create an inflationary depression.
Inflation is ever and always a monetary phenomenon. The Federal Reserve causes inflation. The Federal Reserve could end inflation.
Ridiculous.
The Fed does not create deficits. Those come from Congress.
Sorry, his comment was about inflation, not deficits? Or are you implying that the only reason the money supply is inflated is to sustain government deficits?
The Federal Reserve has no mandate to fund deficits. The US Treasury funds deficits by borrowing.
“In the press conference Powell said a good part of the increase in its inflation forecast is due to tariffs”.
Yeah. And it was ‘transitory’ way back when.
Tariff impacts barely felt, if at all. The FED caused the inflation by monetizing the monstrous government stimulus. And they are maintaining inflation by having rates to low.
It’s not hard to figure out.
Stagflation has arrived.
Wow, according to Trump voters, Trump will not raise prices. Somehow they must know more than all the world’s financial experts, or they including Chair Powell are in on the global conspiracy to lie about Trump’s excellence. I can’t quite figure out which one is the right answer.
The experts at the FED? Oh sure, they’re always right … As are all of the forecasters on Wall Street.
I guess before the golden age starts, we need to go through a depression. Yeah, that’s the ticket!
Without having a depression first, how else will anything afterwards seem like a golden age 😉
How can you say that there is QT in progress when the money stock is rising at a normal pace?
QE and QT are defined by the size of the Fed’s balance sheet, not “money stock”.
Yeah, then they should say so.
What is QT, but a drop in outside money, not inside money. The inside money could be growing faster than the outside money adding to liquidity.
What does QT mean? Quantitative tightening. Wikipedia: “Quantitative tightening (QT) is a monetary policy tool applied by central banks to decrease the amount of liquidity or money supply in the economy.”
Nothing in equity market performance showing any signs of discomfort or belief with Fed prognostications about onset of a sluggish economy.
Suggests what you point out is happening.
Other then US Dollar been getting steadily sold for weeks, in anticipation of a markedly Dovish Fed. Which is not happening.
Imo USD has been oversold considering how much wreckage is going on in rest of worlds economies.
Longer run inflation expectations are quite quiescent. Purging this inflation moving ahead better than I expected for this early in administration. Egg prices for example down 50% in more than a month. But don’t tell liberals this.
Only 3.75 years left to make up whatever economic stats you want. Egg prices are not down much at all. Of course, when the GOP said they were $10/doz, I could never find regular eggs over $4.79 at my stores. So maybe if they are back from a fake $10 to actual $5, then by GOP math prices ARE down 50%. I just figured out how you made this magic happen.
Here you go. I take it you don’t know econ at all, thus your post. https://www.cnbc.com/2025/03/17/wholesale-egg-prices-have-plunged-retail-prices-may-follow.html
Now more than 50%. Thats how commodities work and then the follow through to retail. Instead you said its not true. So your sorry. And when you do get those nice cheap eggs in a few weeks try not scratch a Tesla in the Whole Foods parking lot because you are emotional and not rational.