Yahoo Finance

The other big focus for investors today, the Federal Reserve rate decision and the release of its quarterly summary of economic projections, the SEP. Stock futures holding steady as the central bank is widely expected to keep rates on hold, but commentary from Powell and the update of its dot plot that will be heavily scrutinized by Wall Street. Joining us for more, we've got Yahoo Finance's Alexandra Canal. Hey, Alex.

Hey Brad, yeah, summary of economic projections is only released once a quarter. So there's always a ton of anticipation surrounding this because it gives us a clue into what the Fed is thinking. But it feels like this time around, the stakes are even higher considering where we're at with the stock market and the current economy. There's a lot of fear, a lot of uncertainty surrounding tariffs, some of those other policy headlines. And while I don't expect Powell to really focus on that, economists and analysts have told me that he's really going to have to thread this stagflation needle. So if we start on the stag part of the equation, that's the health of the US economy. He's going to have to really assure investors that, you know, the hard data remains solid. We've seen some very disappointing soft economic data. That's things like surveys, sentiment indicators, uh manufacturing reports. He said before that that really is not a good indicator when you think about consumption. So he's going to have to reiterate the confidence that the hard data, things like the unemployment rate, which remain at multi uh decade lows, that that is in a solid position. Now, on the inflation side of the equation, we have seen a deceleration in price growth when you think about producer inflation, consumer inflation. But there have been some sticky details under the surface that suggest it might be a little bit more difficult to reach that 2% inflation target. That's something that Powell is going to have to address. And that all of that in combination is going to feed through into the interest rate decision. Now, if we take a look at the December projections, the Fed is pricing in two rate cuts to come in 2025. Markets right now, they're thinking it's going to be more around three cuts due to some of those growth concerns. And then on the inflation and GDP side, in December the Fed projected that core PCE will come in at 2.5% and that GDP will come in at 2.1%. Now Goldman Sachs is saying that FOMC participants, they're likely to adjust a bit more cautiously until they have some more clarity around some of those tariff uh guidelines. But Goldman does expect that the Fed's 2025 medium economic projections for core PCE inflation to come in at 2.8% with the updated GDP growth forecast to 1.8%. So a difference of around .3 percentage points either way there. Again, that's a more cautious read. So it's really going to be interesting to see what Powell says and how FOMC members really lean. Are they going to be a little bit more hawkish, a little bit more dovish? And how does all the uh how how do all the uncertainties surrounding this current economy feed into their thought process? So that's why the summary of economic projections is so important. And I'm really excited. I think it's going to be a very um interesting uh estimate to come.

It's always it's always our, you know, Christmas day here when you get your Fed meeting. It's your Super Bowl, right, Alex? Thanks so much for breaking that down. I know you'll be watching all of that today.

Of course.