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Wednesday, June 18, 2025

FOMC Projections: GDP Revised Down, Inflation Revised Up

by Calculated Risk on 6/18/2025 02:08:00 PM

Statement here.

Fed Chair Powell press conference video here or on YouTube here, starting at 2:30 PM ET.

Here are the projections.  The projections are pretty bearish.


The BEA's advance estimate for Q1 GDP showed real growth at -0.2% annualized. There is a wide range of estimates for Q2 GDP, but it is forecast to be over 3.0% (as Q1 distortions reverse). That would put real growth on pace to be at the low end of the March FOMC projections for Q4 over Q4.  So, GDP was revised down for 2025.

GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1
Projection Date202520262027
Jun 20251.2 to 1.51.5 to 1.81.7 to 2.0
Mar 20251.5 to 1.91.6 to 1.91.6 to 2.0
1 Projections of change in real GDP and inflation are from the fourth quarter of the previous year to the fourth quarter of the year indicated.

The unemployment rate was at 4.2% in May after averaging 4.1% for Q1.  The unemployment rate was revised up.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2
Projection Date202520262027
Jun 20254.4 to 4.54.3 to 4.64.2 to 4.6
Mar 20254.3 to 4.44.2 to 4.54.1 to 4.4
2 Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

As of April 2025, PCE inflation increased 2.1 percent year-over-year (YoY). There will likely be some increase in PCE inflation from trade policy.

Without policy changes (tariffs) it appears inflation would be well below the FOMC forecast! The projections for Q4 2025 PCE inflation were revised up.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1
Projection Date202520262027
Jun 20252.8 to 3.22.3-2.62.0 to 2.2
Mar 20252.6 to 2.92.1 to 2.32.0 to 2.1

PCE core inflation increased 2.5 percent YoY in April. The projections for core PCE inflation Q4 2025 were revised up.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1
Projection Date202520262027
Jun 20252.9 to 3.42.3-2.62.0 to 2.2
Mar 20252.7 to 3.02.1 to 2.42.0 to 2.1

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Posted by Calculated Risk on 6/18/2025 02:08:00 PM