Analyst: The Federal Reserve's long-term interest rate forecast means the number of rate cuts will decrease

On December 19, analyst Catarina stated that upon further observation of the Federal Reserve's latest economic forecast, the median long-term federal funds rate has risen to 3%. This was expected as policymakers have been verbally supporting a higher neutral interest rate. This ultimately means there will be fewer rate cuts. For next year, the Fed has raised its growth forecast, lowered its unemployment prediction and significantly increased its inflation projection. They believe that core inflation excluding volatile food and energy will only drop by 0.3 percentage points. Last year, after the Fed raised interest rates to their highest level in 20 years, prices cooled rapidly. The pace has slowed considerably this year and it appears this trend will continue until 2025.