The New York Fed DSGE Model Forecast— December 2025

This post presents an update of the economic forecasts generated by the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (DSGE) model. We describe very briefly our forecast and its change since September 2025 . To summarize, growth in 2025 is expected to be stronger than in September due to a lower projected path of the policy rate, as well as higher productivity. Inflation projections are higher in 2025 because of cost-push shocks, which capture the effects of tariffs. The model’s predictions for the short-run real natural rate of interest (or r*) in 2025 have decreased relative to September.