As widely expected, the Federal Reserve’s Federal Open Market Committee announced another 25-basis-point rate cut. That makes the federal funds rate range 4.25% to 4.50%. The future expectation, however, no longer officially looks like a continued string of additional parings.

“The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance,” the FOMC said in its statement. “The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.”

The tension is seen in the Fed’s economic projections and the so-called dot plot. The median expectation for Personal Consumption Expenditure inflation for 2025 jumped from 2.1% in September to 2.5% in the December meeting. Going forward, 2026 went from 2.0% to 2.1%. Under the current view, it will take until 2027 to get back to a 2.0 percent rate of inflation. Core PCE inflation in the median projection is also 2.5%, 2.2% in 2026, and finally 2.0% in 2027.