Fed officials see two rate cuts in 2025, but overall turn hawkish

By Ann Saphir

WASHINGTON (Reuters) -U.S. central bankers are increasingly split over the appropriate path of policy, with the median of fresh forecasts published on Wednesday still pointing to a half percentage point of rate cuts by year-end, but a rising minority expecting no rate cuts at all.

The projections showed eight of the Fed's 19 policymakers expect to reduce the rate range to 3.75%-4.00%?by the end of this year, and two policymakers felt a further quarter-point reduction would be appropriate.

Seven felt no rate cut would be needed, up from four in March, and two felt just one would be enough.

For next year, the median suggested the group as whole is a bit more hawkish, pointing to a year-end policy rate of 3.6%, higher than the 3.4% forecast in March.

The Fed's decision on Wednesday to leave the policy rate in its current 4.25%-4.50% range was unanimous.

June's quarterly summary of economic projections also showed Federal Reserve policymakers see higher inflation and unemployment than they did three months ago, before President Donald Trump announced a slate of bigger-than-expected tariffs and then quickly put many of them on hold.?

The forecasts reflect policymakers' best guesses as to how the Trump administration's trade and other policies will play out in the economy, and how they would expect to respond.

Policymakers expect inflation by the Fed's targeted metric - the 12-month change in the Personal Consumption Expenditures price index - to end this year at 3.0% before dropping to 2.4% next year, the projections show. They forecast core PCE inflation, which they use to gauge future inflation?3.1% this year.

They also saw weaker?economic growth and the unemployment rate rising to 4.5% this year, higher than the 4.4% they had anticipated three months ago.?

(Reporting by Ann Saphir; Editing by Andrea Ricci)