In their statement, FOMC officials maintain their interest rate forecasts, signaling slight reductions in the future. As they reported, average forecasts for US interest rates remain unchanged: 3.6 percent at the end of 2025, 3.4 percent for 2026 and 3.1 percent for both 2027 and 2028, with a long-term forecast of 3.0%.
Forecasts assume cuts of 25 basis points in both 2026 and 2027, although opinions on the future policy direction vary widely. When it comes to the most important indicators for the U.S. economy, Fed policymakers expect 4.4 percent unemployment in 2026, PCE inflation dropping to 2.4%. and GDP growth to 2.3 percent.
We wrote about economists' forecasts before the Fed's decision this morning in Business Insider Polska.
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Apart from the Fed's decision itself, the prospect of a continuation of the cycle of interest rate cuts in the coming months will also be important. Federal Reserve Chairman Jerome Powell spoke on this matter at 8:30 p.m. Polish time during the FOMC press conference.
The rest of the text below the video
Jerome Powell comments on the Fed's decision to cut interest rates
At the press conference, Powell indicated that since the last FOMC decision, the inflation report has not changed much. In this context, the head of the Fed referred to the recent lockdown in the USA, which suspended the publication of data on, for example, the labor market. As he stated, data for October and mid-November were not collected, which means that the central bank must have limited confidence in them when making decisions.
He added that each FOMC member agreed that inflation in the US remains high. However, as he pointed out, “doesn't think an interest rate increase is a baseline scenario for anyone.”
As Powell admitted, in the FOMC projections GDP forecasts for the United States have been raised. The head of the Fed also added that the situation on the housing market remains “poor”.
It's not just the Fed's decision that matters. Key outlook for the level of interest rates in the US
During Powell's speech after the FOMC decision, investors will try to identify what policy the US Federal Reserve may pursue in the near future..
Read also: Americans' spending and PCE inflation. Will the Fed decide to cut?
Stephen Kolano, serving as chief investment officer at Integrated Partners, predicts that chairman In the coming months, Jerome Powell will emphasize an approach that is strongly dependent on incoming data. This is important because according to November ADP data from last week the pace of employment growth additionally slowed down.
Kolano also pointed out that Powell's term of office, which expires in May 2026, may result in it will become “somewhat neutral” towards market expectations regarding the path of interest rates next year.
Fed Chairman Jerome Powell
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Chip Somodevilla / Getty Images
— I wouldn't be surprised if Jerome Powell said, we've been cutting and now we really need to watch the data, and he stops just short of being hawkish because we've seen weakness in the labor market – said the head of investment at Integrated Partners. In his opinion, postponing potential rate cuts to later months of 2026 could worsen the sentiment on the stock market.
In the background, the election of the new head of the Fed. Donald Trump will decide
In addition, in May 2026, the term of office of the current head of the Federal Reserve, Jerome Powell, expires, and his successor will be appointed by US President Donald Trump. Over the last year Trump has repeatedly criticized Powell for cutting interest rates too slowly, raising questions about the policies of his successors.
There are doubts whether, under the pressure of the US president to reduce interest rates, the new head of the Fed will not make rash decisions that will increase uncertainty in financial markets.
The short list of potential candidates for the new head of the Fed consists of five economists and officials associated with the Federal Reserve and Donald Trump's administration. This group includes: current members of the Fed Board of Governors Christopher Waller and Michelle Bowman, former Governor Kevin Warsh, and Rick Rieder, an executive at BlackRock.
