Fed’s dot plot shows one rate cut for next year

The Federal Reserve still sees just one rate cut in 2026, unchanged from its last forecast about three months ago.

The central bank’s so-called dot plot, which anonymously shows 19 individual members’ expectations, indicates a median estimate of 3.4% for the federal funds rate at the end of 2026, a quarter point lower than the current range between 3.5%-3.75%. The forecast is the same from its projection from last quarter.

The Fed on Wednesday cut its key overnight borrowing rate by a quarter percentage point, marking its third reduction of 2025.

Here are the Fed’s latest targets from 19 FOMC members, both voters and nonvoters:

The Fed’s 2026 rate outlook was the most crucial data point traders were focused on as the central bank has become increasingly divided. There were three dissents from Wednesday’s decision – Governor Stephen Miran favored a steeper half-point reduction while regional presidents Jeffrey Schmid of Kansas City and Austan Goolsbee of Chicago backed holding the line.

On top of the two “no” dovish votes on the rate cut, four other nonvoting meeting participants indicated that they did not go along with the decision. Seven officials also indicated they want no cuts next year, according to the dot plot.

For 2027, the Fed projected the terminal rate hitting 3.1%, indicating one further rate cut. The rate is expected to remain unchanged in 2028, according to the dot plot.

— CNBC’s Jeff Cox contributed reporting.