US Fed cuts growth forecast, raises unemployment projection for 2025

​​​​​​​By Mucahithan Avcioglu

ISTANBUL (AA) - The US Federal Reserve decreased its gross domestic product (GDP) estimates for 2025 on Wednesday, while raising unemployment and inflation rate estimates.

As US President Donald Trump's attempt to restructure the world's largest economy through broad tariffs raises concerns about inflation and GDP growth, the central bank warned that "uncertainty around the economic outlook has increased."

The annual GDP growth rate expectation was cut to 1.7% for 2025, from 2.1% in its December projections.

On the other hand, the forecast for the unemployment rate was raised to 4.4%.

Personal Consumption Expenditures (PCE) Inflation is also expected to rise by an average rate of 2.7% this year, up from the previous estimate of 2.5%.

Jerome Powell, the chair of the Fed, warned that uncertainty is "unusually elevated" as the Trump administration tries to implement drastic economic change.

He claimed that tariffs were "clearly" responsible for a portion of the Fed's increased inflation expectations.

The Fed kept interest rates unchanged Wednesday as Powell hinted earlier this month there would be no change in the rate until Trump's policies take shape.