Summary
Norada Real Estate analysis of FOMC projections for 2026–2028. As of January 2026 (after late-2025 cuts), federal funds rate was at 3.50%–3.75%. Projections: ~3.4% end-2026, ~3.1% end-2027, ~3.1% end-2028. The piece covers dot plot divergence (2026 range: 2.1% to 3.9%), mortgage rate implications, and key risks.
Key Points
- January 2026 starting rate: 3.50%–3.75% (after several late-2025 cuts)
- FOMC December 2025 projections: 3.4% end-2026; 3.1% end-2027 and 2028
- Dot plot range for 2026: 2.1% to 3.9% — wide disagreement
- Fed expects inflation to reach 2% target by 2028; still 2.5% end-2026
- Unemployment projected to peak ~4.5% late-2025 then gradually decline
- Potential risks: stubborn inflation, deeper labor market weakness, geopolitical shocks
- Mortgage rate outlook: Morningstar projects 30-yr rate ~5% by 2028 (from 6.70% average in 2024)
Newsletter Angles
- The wide dot plot range (2.1%–3.9%) illustrates genuine policy uncertainty — this is not a consensus; it’s a committee with fundamentally different views
- The 2028 “neutral rate” question (~3%) matters for readers with long-term financial planning concerns
Entities Mentioned
- Federal Reserve — the institution; FOMC projections
- Jerome Powell — chair whose term ends May 2026; successor will own most of this rate path
Concepts Mentioned
- Tariff-Driven Inflation — mentioned as a factor in near-term projections
- Fed Independence — implicit; rate path depends heavily on who chairs the Fed after May 2026
Notes
Norada Real Estate — real estate investment publication; framing is residential real estate investor. Projections are sourced from FOMC and mainstream institutions (Goldman Sachs, JPMorgan, Morningstar). Useful for the long-range projections but should be read as synthesis, not original analysis.