Fed forecasts only 1 rate cut next year, less than expected

ISTANBUL

The US Federal Reserve is predicting one policy rate cut in 2026, less than anticipated, according to the central bank's median projections released Wednesday.

The bank's "dot plot," which anonymously displays expectations of 19 different members, showed a median projection of 3.4% for the federal funds rate at the end of 2026.

It is comparable to a consensus projection of 3.6% for the year-end in 2025 after two anticipated cuts in addition to Wednesday's cut.

The projection is less than expected in the markets, where two or three rate cuts are expected next year.

The Fed slashed its benchmark federal funds rate by 25 basis points Wednesday between the 4% - 4.25% target range, as widely expected.

It marked the first rate cut this year, as the bank had held the rate unchanged in the five previous meetings.

The central bank said it is attentive to the risks to both sides of its dual mandate and saw downside risks to employment have risen.