Fed to cut rates slightly this year, CBO forecasts

Jan 8 (Reuters) - The Federal Reserve will likely cut rates ​a little more this ‌year to "address downside risks to the ‌labor market," the Congressional Budget Office forecast on Thursday, with higher tariffs and increased demand from ⁠the Trump ‌administration's tax cuts expected to keep inflation well ‍above the Fed's 2% target.

Short-term borrowing costs, currently in the 3.5% -3.75% range, ​will likely be at 3.4% ‌in the fourth quarter, and remain there through 2028, the CBO said in its latest view of the economy.

U.S. unemployment, ⁠it forecast, will ​end this year ​at 4.6% and fall to 4.4% in 2028, and inflation ‍by ⁠the Fed's targeted measure will ease to 2.7% this year ⁠and fall to 2.1% by 2028.

(Reporting ‌by Ann Saphir; Editing ‌by Chizu Nomiyama )