Key Points:
Members of the Federal Open Market Committee – the committee within the Fed that sets policy rates – revised their interest rate expectations upward in December projections.
- The median member now expects a 3.9% federal funds rate in December 2025 ,up from 3.4% in September projections.
- Over the longer-run, the median member expects a rate of 3.0%.
- This is a notable increase from 2.5% in December 2023.
FOMC Federal Funds Rate Projects, Median Member
The monthly FHFA purchase-only house price index grew at a 4.8% annualized rate in October (4.5% year-over-year).
- Home price appreciation continues to be a significant driver of inflation given the weight of owner’s equivalent rent (OER) in price indices.
- OER – the amount a homeowner would pay to rent their home – accounts for around 1/4th of the consumer price index by weight.
FHFA Purchase Index (Dec. 2022 - Present)
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