Today, the Fed also released its economic projections, which include material changes from its September projections.
The change in real GDP for 2024 is expected at 2.5%, compared to the previous expectation of 2.0%. The forecast for 2025 was increased from 2.0% to 2.1%.
The unemployment rate projection for 2024 fell from 4.4% to 4.2%, while the estimate for next year was lowered from 4.4% to 4.3%.
PCE inflation expectations were raised from 2.3% to 2.4% for 2024. The revision to 2025 forecasts was more significant as the PCE inflation projection was raised from 2.1% to 2.5%.
Importantly, the 2025 Federal Funds Rate projection was increased from 3.4% to 3.9%. The estimate for 2026 was also increased from 2.9% to 3.4%.
Overall, the Fed expects a stronger economy, higher inflation and higher interest rates compared to its September projections.