The Federal Reserve recently released its quarterly Summary of Economic Projections, revealing that officials are anticipating two rate cuts next year based on median forecasts. This projection is contingent on certain economic indicators, such as the unemployment rate and inflation rate.
As of November, the unemployment rate stood at 4.2%, with a slight expected increase to 4.3% by the end of 2025. Additionally, the Fed's preferred inflation gauge is projected to reach 2.5%, up from the previous rate of 2.3% in October.
However, the accuracy of these projections may be uncertain due to the potential impact of policies that President-elect Donald Trump and other elected officials may implement. Trump's proposed policies, such as imposing broad-based tariffs and carrying out mass deportations, could significantly alter the economic landscape.
Given the potential changes in economic conditions resulting from these policies, the Federal Reserve may need to reassess the necessity of rate cuts next year.
