Fed Maintains Current Rates, Revises Economic Outlook for 2025
The Federal Open Market Committee (FOMC) maintained the federal funds rate between 4.25% and 4.5% at its March 2025 meeting, while adjusting key economic projections.
FOMC meeting in session
Key Updates:
- Inflation forecast increased from 2.5% to 2.7% for 2025
- Economic growth projection lowered from 2.1% to 1.7%
- Two rate cuts still anticipated for this year
- Balance sheet reduction slowed from $25 billion to $5 billion monthly in Treasury maturities
The Fed cited trade policies and tariffs as primary factors behind the inflation adjustment, while economic growth concerns stem from potential trade-related slowdowns. The committee maintains a data-dependent approach, balancing price stability with growth and employment goals.
Jerome Powell at podium speaking
Market Response:
- Dow Jones Industrial Average: +0.63%
- S&P 500: +0.72%
- Nasdaq Composite: +1.01%
- 10-year Treasury yield rose to 4.3%
Fed Chair Jerome Powell emphasized continued monitoring of economic conditions, with the June FOMC meeting set to provide further guidance on rate decisions. The committee's balanced approach aims to maintain economic stability while addressing inflation risks and ensuring adequate market liquidity through adjusted balance sheet policies.