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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

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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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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

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