by Simon Moore
Forbes
Fixed income markets anticipate that the Federal Reserve will cut interest rates in 2025, but not by much. Short-term interest rates are expected to end 2025 close to 4%, that’s down from the current 4.25% to 4.5% range as of January 2025. This is after the Fed cut rates in December 2024.
This forecast assumes that the U.S. economy continues to grow; unemployment remains slightly above 4%; and inflation ends the year close to 2.5%. These projections were the median forecasts of Federal Open Market Committee policymakers in December 2024. If the economy performs differently than these expectations, then the interest rate outlook will evolve too.