In September 2025, Federal Reserve policymakers projected a 3.6% year-end federal-funds-rate midpoint and expected 1.6% growth, 4.5% unemployment, and 3.0% PCE inflation for the year. By December, they had nudged the growth forecast higher and inflation forecasts lower, while leaving the rate projection unchanged. The FOMC did cut its target range in December, but signaled that any further reductions would depend on incoming data and the balance of risks—not follow a guaranteed schedule.
What the Fed projected in September 2025
The Federal Reserve’s September 16–17 Summary of Economic Projections (SEP) showed the median participant’s outlook for 2025. The figures below are annual changes from the fourth quarter of 2024 to the fourth quarter of 2025, except unemployment, which is the fourth-quarter average.
| Measure | September 2025 median projection |
|---|---|
| Real GDP growth | 1.6% |
| Unemployment rate | 4.5% |
| PCE inflation | 3.0% |
| Core PCE inflation | 3.1% |
| Federal-funds-rate midpoint at year-end | 3.6% |
The rate figure is the projected midpoint of the federal funds target range, not the full range. SEP medians summarize individual participants’ projections under their own assumptions about appropriate monetary policy; they are not a Committee promise or a market forecast. The September SEP table accompanied the September 16–17 meeting.
How the forecast changed by December
The December 9–10 SEP retained the same median unemployment and rate projections but modestly improved the outlook for growth and inflation.
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| Measure | September 2025 median | December 2025 median | Change |
|---|---|---|---|
| Real GDP growth | 1.6% | 1.7% | Up 0.1 percentage point |
| Unemployment rate | 4.5% | 4.5% | No change |
| PCE inflation | 3.0% | 2.9% | Down 0.1 percentage point |
| Core PCE inflation | 3.1% | 3.0% | Down 0.1 percentage point |
| Federal-funds-rate midpoint at year-end | 3.6% | 3.6% | No change |
These are revised forecasts, not final measured results for 2025. The comparison uses the same measures and annual time basis in both projection rounds. The December SEP table reports the December medians.
What the Fed actually did with rates in December
On December 10, the FOMC lowered its federal funds target range by 25 basis points, to 3.50%–3.75%, effective December 11. That range was the Committee’s actual policy decision; it is distinct from the SEP’s 3.6% projected year-end midpoint.
The decision was divided. Stephen Miran dissented in favor of a larger, 50-basis-point cut. Austan Goolsbee and Jeffrey Schmid dissented in favor of leaving rates unchanged. The split showed disagreement over the appropriate pace of policy adjustment, not a change to the published median projection.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Would the Fed cut rates again in 2025?
By December, the Fed had made a cut, but the minutes did not promise another one on a fixed timetable. Most participants judged that further reductions would likely be appropriate if inflation declined as expected. Some thought rates could remain unchanged for a time after a cut.
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The Committee described uncertainty on both sides of its mandate. Participants saw inflation as still above the Fed’s 2% longer-run goal and discussed possible tariff-driven pressure on goods prices. Staff judged risks to employment and real GDP to be skewed to the downside, while inflation risks were skewed to the upside. These were assessments recorded at the December meeting, not certain predictions.
The FOMC’s minutes stated: “In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee would carefully assess incoming data, the evolving outlook, and the balance of risks.” The statement captures why a projected rate path should not be read as a promise: future decisions remained conditional on how the outlook developed.
Quick Recap
What the projections do—and do not—tell you
- They show policymakers’ outlook at a particular meeting. September and December projections reflect what participants expected at those times, and can change as conditions and judgments change.
- The median is not a unanimous plan. It is the middle projection among participants, each using an individual assessment of appropriate policy. It does not commit the FOMC to a rate move.
- The projected rate and target range are different figures. The 3.6% figure is a projected year-end midpoint; 3.50%–3.75% was the actual range set in December.
- Forecasts are not realized outcomes. The December SEP’s growth, unemployment, and inflation figures are projections, not final 2025 results.
- The projections do not quantify household borrowing costs. The figures here do not establish how a Fed decision changed mortgage, credit-card, auto-loan, or savings rates.
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