Chart of the Week: FOMC Summary of Economic Projections for Fed Funds Rate
Each quarter, members of the Federal Open Market Committee (FOMC) submit their projections for various economic measures (i.e., real gross domestic product growth, the unemployment rate, inflation, and the federal funds rate). This month’s projections, shown in the Summary of Economic Projections (SEP), include 2028 for the first time.
In this week’s MBA Chart of the Week, we track the members’ quarterly published SEP federal funds rate (FFR) projections from the last three September meetings, and the projection from this June. Each line represents, for a given vintage of predictions, the median value of the projected appropriate target level for the federal funds rate at the end of the specified calendar year. For example, the blue line, which depicts the latest September 2025 projections, shows a median target level at the end of 2025 of 3.6% (down from 3.9% in June), 3.4% at the end of 2026 (vs. 3.6% in June), and 3.1% at the end of both 2027 and 2028.
The median participant projects that the fed funds rate target level will be lowered by a total of 75 bps this year. Interestingly, FOMC participants’ projections for the end of 2025 ranged from a high of 4.4% (i.e., no cuts this year) to a low of 2.9% (i.e., 150 bps of FFR cuts this year). Notably, however, the low 2.9% projection is an outlier and is 70 bps lower than any other member’s projection.
The chart also illustrates how policymakers’ views on the FFR have evolved over the last two years—downward from September 2023 to September 2024, then upward to June 2025, and again downward in the last quarter. This “zigzag” reflects underlying economic uncertainty, although the latest figures suggest the expectation that the job market will remain soft while inflation, though rising, won’t move too far before returning to the Fed’s 2% target.
Mortgage rates, along with longer-term Treasuries moved in advance of this week’s dovish shift in monetary policy and reached their lowest point for the year last week, spurring a strong jump in refinance activity. If mortgage rates hold at these levels, origination activity will be boosted, both for homeowners who purchased in the last three years and can realize considerable savings at these rates, and for potential homebuyers, who now have one more reason to look for a home, in addition to increasing housing supply in many markets.
–Mike Fratantoni (mfratantoni@mba.org), Eddie Seiler (eseiler@mba.org)
