Federal Reserve holds interest rates steady
The Federal Reserve held its benchmark interest rate steady on Wednesday, with investors now waiting to hear from Chair Jerome Powell for further clues on the direction of monetary policy and the state of the U.S. economy.
"Uncertainty around the economic outlook has increased," the Fed stated in its announcement. "The committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the committee's goals," News.Az reports, citing CBS News.
The Fed now expects the economy to grow more slowly this year than it did three months ago, with unemployment around the U.S. projected to hit 4.4%, up from 4.1% in February, according to economic projections also released Wednesday. The central bank forecasts inflation to edge up to 2.7%, up from from its current level of 2.5%.
Policymakers now expect the nation's gross domestic product — the total output of goods and services — to expand 1.7% this year, down from their December forecast of 2.1%. In 2024, GDP grew 2.8%.
Economists have warned that the Trump administration's aggressive trade policies, including steep tariffs on Canada and Mexico scheduled to take effect April 2, could boost boost inflation and weigh on economic activity.
The Fed said it will maintain the federal funds rate at its current range of 4.25% to 4.5%.
The central bank's so-called dot plot, used by the Fed to indicate its outlook for where interest rates are headed, indicates the year-end 2025 median projection for the federal funds rate at 3.88%, signaling 50 basis points in cuts this year.
Most economists expect the Fed to lower interest rates two or three times this year, although that hinges on inflation continuing to move closer to the central bank's 2% annual target.
Stocks maintained modest gains after the FOMC decision.
Similar news
