Federal Reserve holds interest rates steady, trims economic growth outlook
The Fed kept its benchmark interest rate stable on Wednesday, and now investors are awaiting news from Chairman Jerome Powell to learn more about monetary policy and the U.S. economy.
“The uncertainty in the economic outlook has increased,” the Fed said in it. announcement. “If there is a risk that could hinder the Commission’s objectives, the Commission will be prepared to adjust its monetary policy position appropriately.”
The Fed now expects economic growth to be slower this year than it was three months ago, with unemployment around the U.S. expected to reach 4.4%, from February 4.1%according to economic forecasts issued Wednesday. The central bank predicts inflation rate to be as high as 2.7%, up from the current 2.5%.
Policymakers now expect the country’s GDP (total output of goods and services) to expand by 1.7% this year, down from their December forecast of 2.1%. In 2024, GDP grew by 2.8%.
Economists warn that the Trump administration’s aggressive trade policies, including high tariffs on Canada and Mexico, which will take effect on April 2, may strengthen inflation and weigh economic activity.
“Recognizing possible travel directions in the Trump administration’s policy aspects, FOMC participants have revised their inflation forecasts while modifying their GDP forecasts,” one report said in a report.
Investors have Almost no chance to signal The Federal Open Market Committee (FOMC), the central bank’s interest rate setting panel, lowered interest rates this month. However, President Trump’s active trade policy has sparked attention to economic growth, which has also expanded uncertainty in financial markets.
“What’s currently making the FOMC from continuing to push interest rates down is uncertainty about the Trump administration’s economic policy,” Carl Weinberg, chief economist at high frequency economics, wrote in a research note ahead of the Federal Reserve’s decision on Wednesday.
The Fed said it would keep its current federal funding rate at 4.25% to 4.5%.
The so-called dot chart used by the Federal Reserve to show the prospect of its interest rate moving forward shows that the year-end median federal funding rate is 3.88%, which represents the 50 basis points cut this year.
Most economists expect the Fed to lower it by two to three times this year, although that depends on inflation continuing to get closer to the central bank’s annual target of 2%.
Maintain stocks Moderate benefits After the FOMC decision.
– This is a development story that will be updated.
Contributed to this report.
