Fed Cuts Interest Rates by 25 Basis Points

The video discusses the Federal Reserve's forecast for rate cuts, with expectations reduced to two cuts next year and additional cuts in 2026 and 2027. The long-term Fed funds rate is expected to rise to 3%, reaching the neutral rate by 2028. There is dissent within the committee, with some members preferring to leave rates unchanged. The Fed's statement now emphasizes careful assessment of incoming data for rate adjustments. Inflation forecasts have been revised upwards, with headline and core inflation expected to be 2.5% by the end of next year. Unemployment is projected to be 4.3%, and GDP growth is expected to slow down to 2.1% by 2026. A technical adjustment was made to the offering rate for overnight reverse repurchase agreements, lowering it to 4.25%.

What is the expected long-term federal funds rate according to the Federal Reserve's forecast?

• 4%

• 3%

• 2%

• 5%

Which new Fed President dissented by preferring to leave rates unchanged?

• Mary Daly

• Beth Hammock

• John Williams

• Jerome Powell

What change has been made to the Federal Reserve's statement regarding future rate adjustments?

• They will carefully assess incoming data.

• They will ignore incoming data.

• They will decrease rates immediately.

• They will increase rates immediately.

What is the revised forecast for headline inflation by the end of next year?

• 2.5%

• 1.8%

• 2.1%

• 3.0%

By how many basis points has the offering rate for overnight reverse repurchase agreements been lowered?

• 30 basis points

• 20 basis points

• 10 basis points

• 40 basis points