Financial Market and Economic Forecasts

December rate increase: The federal funds rate and prime rate are each forecast to increase by 25 basis points (0.25 percentage point) in December 2026.

Interest Rates: December Increase

The fed funds and prime rate tables show monthly averages of 3.88% and 7.00% in October–November, 4.06% and 7.18% in December, and 4.13% and 7.25% from January through May. The December averages reflect the increase during the month; the full 25-basis-point rise is reflected in January's averages.

The 10-year Treasury yield rises from 5.19% in October to a January peak of 5.33%, then trends down to 4.93% in May. The 30-year mortgage rate follows the same pattern, moving from 7.07% to 7.21% and then 6.81%, with a brief March uptick in both series.

U.S. Stock Indexes

All four indexes rise from October through February, retreat in March, and reach their forecast-period highs in May. The S&P 500 advances from 7,611 in October to 7,905 in December and 8,105 in February, dips to 7,984 in March, and reaches 8,302 in May. October-to-May levels increase from 51,654 to 55,810 for the Dow, 26,461 to 29,280 for the Nasdaq, and 2,861 to 3,136 for the Russell 2000.

Major Exchange Rates

EUR/USD, GBP/USD, and AUD/USD reach December lows of 1.109, 1.289, and 0.687, recover to April highs of 1.167, 1.351, and 0.717, and ease to 1.155, 1.338, and 0.710 in May.

USD/JPY peaks at 161.5 in December, falls to 153.4 in April, and rebounds to 155.1 in May. USD/MXN follows a similar path: 18.52 in December, 17.73 in April, and 17.93 in May. USD/CNY stays within 6.67–6.73 and ends May at 6.69.

U.S. Growth, Inflation, and Unemployment

Real GDP growth is projected at 2.00% in October–December and 2.06% in January–February. CPI inflation declines from 3.46% in October to 2.81% in December and 1.82% in April. Unemployment rises from 4.1% in October to 4.2% in November–December, then fluctuates between 4.2% and 4.3%, ending April at 4.3%.

Gold, Silver, and Crude Oil

Gold falls from $4,183 per troy ounce in October to $4,079 in December, recovers to $4,437 in April, and eases to $4,373 in May. Silver dips from $61.02 per troy ounce in October to $60.53 in November, climbs to $73.94 in April, and ends May at $73.49. Crude oil rises from $99.70 per barrel in October to $101.20 in November, then declines each month to $75.80 in May.

Coverage: October 2026–May 2027 where published. Stock indexes, interest rates, exchange rates, and commodity prices are monthly averages. GDP growth and CPI inflation are year-over-year changes. The public GDP table ends in February; inflation and unemployment tables end in April.