US Federal Reserve Downgrades 2025 Economic Growth Forecast to 1.7%

The U.S. Federal Reserve (Fed) reduced its economic growth projection for 2025 to 1.7% on Wednesday, March 19, 2025, a decrease of four-tenths from the 2.1% forecast in December. The Fed also anticipates slower growth for 2026 and 2027, projecting a 1.8% increase in real Gross Domestic Product (GDP) for both years, down two-tenths and one-tenth respectively from initial estimates. The unemployment rate is expected to be 4.4% this year, and 4.3% in 2026 and 2027. Inflation is projected to be higher, with the Personal Consumption Expenditures (PCE) Price Index at 2.7% for this year, two-tenths higher than in December. Inflation is expected to slow to 2.2% in 2026 and 2% in 2027. The Fed also announced it would maintain interest rates in their current range of 4.25% to 4.5%.