Federal Reserve projects slower growth, stable inflation through 2026

The Federal Reserve's policymaking committee released economic projections from its June 16-17 meeting, offering officials' views on the path ahead for growth, inflation, and employment.

Fed officials projected 2.1% gross domestic product growth in 2024, down from 2.5% in 2023. They forecast expansion would continue at a 2% pace in 2025 and 2026, suggesting officials expect the economy to decelerate from recent performance.

Inflation forecasts showed prices rising 2.4% this year, measured by the personal consumption expenditures index. Officials projected inflation would decline to 2.2% in 2025 before reaching the Fed's 2% target in 2026. The projections reflected persistent price pressures even as officials anticipated gradual improvement.

On employment, committee members projected the unemployment rate would stand at 4.1% by year-end 2024. They forecast the rate would rise modestly to 4.2% in 2025 before declining to 4.1% again in 2026.

The Fed held its benchmark interest rate steady in the 5.25% to 5.5% range at the June meeting. Officials have kept rates at this level since July 2023 while inflation remained elevated compared to their target.

The projections reflect conditions the Fed faced entering mid-2024, with economic growth moderating from the strong pace seen in early 2024 while inflation persisted above the central bank's goal. Officials continued to emphasize the need to monitor economic data before making changes to monetary policy.

The committee regularly releases economic projections at select meetings during the year. These forecasts represent each official's estimate of where major economic indicators would head, though they do not constitute a committee consensus or binding policy commitment.