Fitch: Anticipates Two Fed Rate Cuts in the First Half of the Year, Unemployment Rate May Stabilize at 4.6% This Year

Odaily News Fitch has revised upwards its US GDP growth forecast for 2025 and its growth projection for 2026. This adjustment was made after incorporating economic data whose release was delayed due to the government shutdown at the end of last year. Fitch now expects GDP growth of 2.1% in 2025, higher than the 1.8% forecast in its December 2025 Global Economic Outlook (GEO). Concurrently, the growth forecast for 2026 has been raised from the previously reported 1.9% to 2.0%. Given the incomplete October data, recent CPI inflation trends are difficult to interpret. It is estimated that the inflation rate rose to 3.0% in December 2025 (from 2.7% in November) and, affected by delayed tariff pass-through, will increase further in 2026, with an expected year-end rate of 3.2%. As the impact of slowing employment growth is offset by a decline in labor force growth, the average unemployment rate for 2026 is projected to be 4.6%, close to recent levels. We expect the Federal Reserve to implement two interest rate cuts in the first half of 2026, lowering the federal funds rate (upper bound) to 3.25%. (Jin10)