Fitch: Expects Fed to Cut Rates Twice in First Half, Unemployment to Stay at 4.6% This Year
BlockBeats News, January 8th, Fitch Ratings raised its 2025 U.S. GDP growth forecast and 2026 growth projection. This adjustment was made after incorporating economic data delayed due to last year's government shutdown. Fitch currently expects GDP to grow by 2.1% in 2025, higher than the 1.8% forecasted in its December 2025 Global Economic Outlook (GEO). At the same time, the growth forecast for 2026 has been revised upward from the previous report's 1.9% to 2.0%.
Given the incomplete data for October, recent CPI inflation trends have been difficult to interpret. It is estimated that the inflation rate rose to 3.0% in December 2025 (2.7% in November), and due to the delayed impact of tariff pass-through, it is expected to further increase in 2026, reaching an estimated 3.2% by the end of the year. With the slowdown in job growth offset by declining labor force growth, the average unemployment rate in 2026 is expected to be 4.6%, close to recent levels. We expect the Fed to cut interest rates twice in the first half of 2026, lowering the federal funds rate (upper limit) to 3.25%.
(FX678)
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