Market analysis: Traders will closely monitor the Federal Reserve's interest rate cut expectations

Before the Fed releases its second forward-looking dot plot for 2025, it is worth reviewing officials' latest forecasts since March. At that meeting, officials expected GDP growth to slow to 1.7 per cent this year, unemployment to rise to 4.4 per cent and the Fed's favoured PCE measure of inflation to show prices rising 2.7 per cent in 2025 as tariffs slow economic growth and push up costs. Perhaps most importantly, the median official expectation is that the Fed will cut interest rates twice for the rest of 2025, followed by two more in 2026. The rate cut forecast will be one of the first to grab investors' attention when the new dot plot is released at 2pm tonight.