Fed to Assume Extension of Trump Tax Cuts, Bill Dudley

The transcript discusses the assumptions made for the 2025 economic policy backdrop, focusing on the extension of the 2017 tax cuts and the uncertainty surrounding tariffs and immigration policies. It evaluates the impact of these policies on growth, inflation, and productivity. The discussion also covers the utility of dot plots in economic forecasting and the expected rate cuts in 2025, highlighting the potential for a pause in January. The conversation concludes with a focus on the Federal Reserve's estimates of the neutral rate and the implications for monetary policy.

What assumption is likely to be included in the economic forecast for 2025?

• Reduction in government spending

• Changes in immigration policy

• Increase in tariffs

• Extension of 2017 tax cuts

Why is it difficult to include tariffs in the economic forecast?

• Tariffs have no impact on the economy

• Tariffs are always beneficial

• The magnitude and duration of tariffs are uncertain

• Tariffs are already included in the forecast

What is the expected impact of higher tariffs and deportation on the economy?

• Increase in growth and decrease in inflation

• Decrease in growth and increase in inflation

• No impact on growth or inflation

• Increase in both growth and inflation

How many rate cuts are expected in 2025 according to the latest forecast?

• No rate cuts

• Two or three rate cuts

• Three rate cuts

• Four rate cuts

What is the median estimate of R star according to the FOMC?

• 3.5%

• 2.5%

• 2.9%

• 4.0%