# FOMC UPDATE

The Fed has now cut rates by __25 basis points__, bringing the federal funds target range down to **4.00%–4.25%**. The decision was almost unanimous, with one member dissenting in favour of a __50 basis point cut__, showing there is already a dovish wing inside the Fed pushing for faster easing. Balance sheet runoff continues unchanged, with no changes to QT caps.

The dot plot is where the real shift has taken place. For 2025, the **Fed now sees the policy rate at 3.6%, down from 3.9% in June**, which signals two to three more cuts this year (big change from June 2024). For 2026, the median projection has been lowered to **3.4%** from **3.6%**, and for **2027** it has been marked down to **3.1%** from **3.4%**. The longer run rate remains unchanged at **3.0%**. This is a clear dovish tilt across the entire curve, showing that the Fed expects to  consistently reduce rates.

The Summary of Economic Projections shows **GDP growth is projected at 1.6% in 2025**, picking up slightly to **1.9%** in 2027. Unemployment is projected at **4.5%** this year, going back to __4.2% by 2028__. Inflation is expected to move down from **3.0%** this year to **2.6% in 2026** and reach the **2.0%** target by 2028, with core PCE following the same path, starting at **3.1%** this year, **2.6%** in 2026, and back to **2.0% by 2028.**

The Fed has mentioned that employment risks are rising, with job gains slowing and unemployment edging higher, even as inflation remains somewhat elevated. This is an important shift in emphasis compared to earlier this year (where main emphasis was inflation). In June, the dot plot still showed __only two cuts for 2025__, but now the Fed has **lowered the entire trajectory of rates**, signaling that the easing cycle has begun. They are not front loading cuts, but the path downward is quite clear imo and that is exactly why there is no reason to be long term bearish on the market