The Federal Reserve expects one rate cut in 2026, with a median estimate of 3.4% for the federal funds rate at year-end. The recent quarter-point reduction marks the third cut of 2025. The Fed’s outlook is a crucial point as the central bank faces increasing division among members.

Some members dissented from the recent decision, showing disagreement within the Fed. While three members wanted a steeper half-point reduction, seven officials indicated they prefer no cuts next year. The Fed also projected a terminal rate of 3.1% for 2027, with no further cuts expected in 2028.

Overall, the Fed remains divided on future rate cuts, with some pushing for more aggressive reductions while others advocate for holding the line. The dot plot provides insight into individual members’ expectations, highlighting the uncertainty surrounding the central bank’s monetary policy decisions.

Read more at CNBC: Fed’s dot plot shows one rate cut for next year