Jan 8 (Reuters) – The Federal Reserve will likely cut rates a little more this year to “address downside risks to the labor market,” the Congressional Budget Office forecast on Thursday, with higher tariffs and increased demand from the Trump administration’s tax cuts expected to keep inflation well above the Fed’s 2% target.
Short-term borrowing costs, currently in the 3.5% -3.75% range, will likely be at 3.4% in the fourth quarter, and remain there through 2028, the CBO said in its latest view of the economy.
U.S. unemployment, it forecast, will end this year at 4.6% and fall to 4.4% in 2028, and inflation by the Fed’s targeted measure will ease to 2.7% this year and fall to 2.1% by 2028.
(Reporting by Ann Saphir; Editing by Chizu Nomiyama )
