:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-185262914-f4ac7af79e95482790ca97e0147f3536.jpg "United States Federal Reserve Bank on Constitution Avenue in Washington, DC.")
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Key Takeaways
- The Federal Reserve held its key interest rate steady, as widely expected by financial markets.
- Fed officials cause adopted a “wait-and-see” approach to interest rates as they wait for clarity on whether President Donald Trump’s swap wars will stoke inflation, push up unemployment, or both.
- Fed officials adopted a more pessimistic outlook for the year up ahead, raising their expectations for inflation while lowering economic growth and employment forecasts.
As widely expected, the Federal Stockpile held its key interest rate steady, waiting for the economy to send signals about its trajectory amid uncertainty just about the effects of President Donald Trump’s trade war.
The Federal Reserve’s policy committee held the fed funds rate in a chain of 4.25% to 4.5%, where it’s been since January Wednesday. The key interest rate, which influences borrowing gets on all kinds of loans, is high enough that Fed officials consider it a drag on both inflation and the growth of the economy.
Fed officials aim to amass the fed funds rate high enough to push down inflation, which has stayed stubbornly above the Fed’s goal of a 2% annual at all events in recent months, but not so high it dampens business to the point where unemployment rises severely. Trump’s campaign of assessments on trading partners complicates the outlook for the Fed since it could both slow the economy and push up inflation, according to money-making forecasters. It has caused uncertainty among business leaders and consumers that could damage the economy.
“Uncertainty approximately the economic outlook has increased,” the Federal Open Market Committee said in a statement accompanying the interest rate decidedness.
The Fed’s outlook for the economy has worsened since December, when officials last projected inflation, unemployment, and interest places, indicating a growing risk of “stagflation.”
At Wednesday’s meeting, members of the Federal Open Market Committee penciled in the unemployment scold rising to 4.4% by the end of the year, up from 4.3% in December; inflation as measured by core Personal Consumption Expenditures increase at 2.8% over the year, up from 2.5% in the December projections; and the Gross Domestic Product rising 1.7%, down from the 2.1% improvement the most recent forecast.
Left unchanged was the Fed’s outlook for rate cuts this year: officials at the central bank even now anticipate cutting the fed funds rate by half a percentage point, to a range of 3.75% to 4%, by the end of 2025.
In addition to tariffs, another spell of which is due April 2, Federal Reserve Chair Jerome Powell said the Fed was eying Trump’s proposed tax interferes, cuts to federal regulation, and crackdown on immigration. All the uncertainty was keeping the Fed on the sidelines, he said.
“The new administration is in the process of implementing regulation changes in four distinct areas: trade, immigration, fiscal policy, and regulation. It is the net effect of these changes that hand down matter for the economy, and for the path of monetary policy. While there have been recent developments in some of these areas, chiefly trade policy, uncertainty around the changes and their effects on the economic outlook is high,” Powell said. “We are focal pointed on separating the signal from the noise as the outlook evolves.”
Update, March 19, 2025: This article has been updated after flier to include comments from Federal Reserve Chair Jerome Powell’s press conference.