As widely expected, the Federal Reserve lowered rates by 25 basis points yesterday, Sept. 17. It was the first rate cut by the U.S. central bank in 2025, and the so-called dot plot called for another 50-basis-point rate cut this year.
Notably, the rate cut came at a time when inflation is still running above the Fed’s 2% target. The Fed maintained its 2025 core Personal Consumption Expenditures (PCE) inflation projection at 3.1% while raising the 2026 forecast from 2.4% to 2.6%. The Fed also raised its 2027 inflation projection and does not expect its preferred PCE metric to fall to 2% that year either.
