Fed officials sees one more rate hike this year

The Federal Reserve officials expect higher growth in gross domestic product (GDP) and one more interest rate hike by the end of the year, the latest Summary of Economic Projections, released on Sept. 20, showed.

The Federal Open Market Committee (FOMC) officials raised real GDP growth forecast to 2.1% from the previous 1.0% in June. The GDP growth is expected to ease to 1.8% in 2025.

The Fed officials kept their forecasts unchanged for average interest rates at 5.6% by year-end, but revised down their expectations for rates to reach 5.1% at the end of 2024, compared to June forecasts of 4.6%. Policy rates are projected to be steady at 2.5% in the long term.

Policy makers reduced their forecast for the unemployment rate to 3.8% from 4.1% in June. They also expected unemployment to increase to 4.1% in 2025.

Projections for the price index for personal consumption expenditures (PCE) accelerated to 3.3% in the fourth quarter of 2023, up from the June forecast of 3.2%. PCE is expected to ease to 2.2% in 2025.

Policy makers also expect core inflation measured by the personal consumption expenditures price index to end the year at 3.7%, down from the 3.9% forecast over the summer. Inflation is projected to ease to 2.3% in Q4 2025.