The FOMC dot plot from September 2023 showed the median rate at the end of 2024 at 5.1%. In the December report:
- For 2024, the median fed funds target rate is now 4.6% vs 5.1% in June – down -0.50%
- For 2025, the median fed funds target rate is now 3.6% vs 3.9% in June – down -0.30%
- For 2026, the median fed funds target rate is now 2.9% vs 2.9% in June – unchanged.
Below is the new dot plot from December:
For comparison, the dot plot from September 2023 showed the following:
Dot plot from September 2023
Regarding the central tendencies for GDP, Unemployment and PCE inflation (headline and core) below is the table with comparisons from September:
Central tendencies of economic indicators
Highlights from the central tendencies:
- PCE inflation for 2024 moved from 2.5% down to 2.4%
- Core PCE inflation for 2024 moved from 2.6% to 2.4%
- Unemployment for 2024 remained unchanged at 4.1%
- GDP for 2024 moved from 1.5% to 1.4%
- The Fed does not see inflation to reach 2.0% until 2026 although they do see inflation at 2.1% at the end of 2025 (close enough).
- Unemployment rate peaks at 4.1%.
- GDP growth is modest at below 2%.
The Fed pricing for 2024 now at 135 bps vs 115 bps prior to the release. .
Stocks are higher. Yields are lower. US dollar is lower