The latest dot plot from the Federal Reserve shows that there is a divergence among 19 officials regarding interest rate expectations for 2025:
4 officials believe that there should be no rate cuts in 2025.
4 officials believe that a cumulative rate cut of 25 basis points should be made.
9 officials believe that a cumulative rate cut of 50 basis points should be made.
2 officials believe that a cumulative rate cut of 75 basis points should be made.
No officials believe that a cumulative rate cut of 100 or 125 basis points should be made.
This indicates that the majority of officials expect a rate cut of 50 basis points in 2025, equivalent to two rate cuts of 25 basis points each.
Compared to previous expectations, this forecast shows that the Federal Reserve's anticipated rate cuts over the next three years have weakened.
Additionally, the market has nearly reached a consensus on the Federal Reserve maintaining the current benchmark interest rate of 4.25-4.5%, but the futures market shows a high level of focus on the probability of a rate cut in June, reaching 57.7%.
Overall, the dot plot reflects the divergence among Federal Reserve officials regarding the future path of interest rates, showing differing views on the potential risks of economic slowdown and inflation.
