The Fed anticipates fewer rate cuts in 2025 than previously predicted.

The Federal Reserve projected only two quarter-point rate cuts in 2025, which is fewer than previously forecast, according to the central bank's medium projection for interest rates.

The dot-plot revealed that officials anticipate interest rates dropping to 3.9% by the end of 2025, within a target range of 3.75% to 4%, as the Fed had projected four quarter-point cuts, or a full percentage point reduction, in 2025, in September.

At the Fed's final policy meeting of the year on Wednesday, the committee set the target range for overnight borrowing rate at 4.25%-4.5%.

In 2025, 14 out of 19 officials predicted two quarter-point rate cuts or fewer, while only five members projected more than two rate cuts next year.

Officials have indicated that there will be two more cuts in 2026 and another in 2027. In the long term, the committee expects the "neutral" funds rate to be 3%, which is 0.1 percentage point higher than the September update. The rate has gradually increased this year.

The Fed's latest targets from 19 FOMC members, both voters and nonvoters, have been revealed.

The Fed's preferred gauge for headline and core inflation was raised to 2.4% and 2.8%, respectively, from the September estimates of 2.3% and 2.6%, indicating slightly higher expectations for inflation.

The committee revised its forecast for full-year GDP growth to 2.5%, a 0.5 percentage point increase from its previous projection. Nevertheless, the officials anticipate that GDP growth will slow down to its long-term projection of 1.8% in the future years.

The Fed revised its unemployment rate estimate from 4.4% to 4.2%.

— CNBC's Jeff Cox contributed reporting.