Fitch Ratings revised its US economic growth forecasts upwards for 2025 and 2026, while stating that it expects the Fed to make two interest rate cuts in the first half of 2026.
The organization also stated that the unemployment rate is likely to remain stable at 4.6 percent this year.
Fitch has updated its growth projections, taking into account economic data delayed due to the government shutdown at the end of last year. Accordingly, the forecast for US gross domestic product (GDP) growth in 2025 has been raised from 1.8 percent to 2.1 percent. The growth expectation for 2026 has also been increased from 1.9 percent in the previous report to 2.0 percent.
On the inflation front, the outlook is more complex. It was noted that the lack of data for October makes it difficult to interpret the latest consumer price index (CPI) trends. Fitch forecasts that inflation will rise from 2.7 percent in November 2025 to 3.0 percent in December 2025, and could climb to 3.2 percent by the end of 2026 due to the lagged effect of tariffs.
It is stated that the slowing rate of job growth will be offset by the decline in labor force participation, and the average unemployment rate in 2026 is expected to remain close to recent levels at 4.6 percent.
Regarding monetary policy expectations, Fitch forecasts that the Fed will make two interest rate cuts in the first half of 2026, lowering the upper band of the federal funds rate to 3.25 percent.
*This is not investment advice.
