UBS Managing Director and Senior Portfolio Manager Jason Katj discussed whether the Federal Reserve would cut interest rates on ‘Veri & Co.’.
American economy is at a divine point federal Reserve The labor market is weakening despite inflation above the 2% target of 2% of the fed to first cut interest rates for this month.
More uncertainty is more Trump administration Along with changes in immigration policy, change in trade policy and tariffs, which have produced uncertain approaches for economic growth, inflation and unemployment from major institutions.
The announcement in the rate of Federal Reserve was with updated economic estimates, while Nonpartison Congress’s Budget Office (CBO) and Trump Administration Management and Budget (OMB) have also released new forecasts.
A look here is how Fed, CBO and OMB see the approach for economic growth, inflation and unemployment rate for the next four years.
Fed cuts interest rates for the first time this year, which weakens the labor market
The Federal Reserve, CBO and Trump administration released updated economic estimates this month. (Spencer Plot / Getty Image / Getty Images)
Economic growth
real GDP (GDP) growth was 2.4% in 2024, although it is estimated to be slow this year before rebounding in the coming years, while the latest Commerce Department data shows that the economy has increased at an annual rate of 1.6% in the first half of 2025.
Fede estimates show that GDP is coming at 1.6% in Q4 of 2025, which is compared to the same quarter. GDP growth is estimated to increase by 1.8% next year and 1.9% in 2027, before returning to 1.8% in 2028.
CBO estimates The 1.4% GDP growth from September to 2025, 2027 in 2026 and 2.8% in 2028 to 2.2% in 2026.
OMB of Trump Administration GDP growth of 1.8% in 2025, 3.2% in 2026 and 3.1% in the next two years.
US economy grew faster than expected in the second quarter
inflation
One of the most closely seen inflation metrics is individual consumption expenditure (PCE) index, which is the Fed’s favorite inflation gauge to assess because it seems to keep the price growth in-line in-line with its long-lasting 2% target. in August, PCE inflation 2.7%.
In Q4 of 2025, PCE inflation inflation will increase by 3% year-to-year. This will reduce inflation to 2.6% in 2026 before it decreases by 2.1% in 2027 in 2026 and the central bank’s 2% target in 2028.
CBO Projects PCE inflation will increase by 3.1% in Q4 of 2025, which sees a decline of up to 2.4% in 2026 before returning to 2% in 2027 and 2028.
The OMB of the Trump administration estimates that PCE inflation will be 2.4% at the end of this year, and 2026 will fall by 2% and then there will be there through 2028. OMB, like other estimates, calculates PCE based on an average year-on-year instead of using Q4 framework.
Another popular Inflation gauge The Consumer Price Index (CPI), which CBO and OMB have released updated estimates for this month.
The CBO hit the CPI 2.8% year-on-year in 2025, before 2.7% and 2.2% in 2027 and 2028. The OMB Project CPI inflation will be 2.5% this year and will decrease by 2.2% in 2026 and then increased to 2.3% before returning to 2.2% in 2027.
Unemployment rate
Job has increased in recent months with unemployment rate Increasing up to 4.3% in AugustIt is expected to release the September job reports on this Friday with the Bureau of Labor Statistics, with a possible disruption due to a possible government shutdown. The last time a report of a job was not released on October 2013 on the scheduled date, when the government was closed on a deadlock between Republican and President Obama’s signature law, Affordable Care Act.
Fed projects Unemployment rate This year will increase by 4.4% in 2026, 4.3% in 2027 and 4.2% in 2028, 4.5% in Q4 of this year.
CBO sees the unemployment rate of 4.5% in Q4 of 2025. It estimates a decline by 4.2% in 2026 before returning to 4.4% in 2026 and 2028.
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The OMB projects of Trump administration unemployment rate will fall to 4.1% based on annual average measurement this year. This was followed by 3.9% in 2026 and 3.7% in 2027 and 2028.
