The New York Fed DSGE Model Forecast—June 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 our forecast and its change since March 2025 . To summarize, the model points to a marked weakening in real GDP growth across the forecast horizon (with downward revisions relative to March), driven by weaker-than-expected Q1 data and the anticipated effects of tariff-related markup shocks. The core PCE inflation forecast has been revised significantly higher in the near term, with moderate upward adjustments in later years, reflecting persistent cost pressures. The real natural rate of interest has been revised slightly downward across the forecast horizon, reflecting weaker economic fundamentals.