Federal Reserve Holds Rates, Forecasts Slower Growth
Analysis based on 6 articles · First reported Mar 19, 2025 · Last updated Mar 20, 2025
The United States — Federal Reserve's decision to keep interest rates unchanged and its forecast for higher inflation and slower growth create uncertainty for financial markets. However, the United States — Federal Reserve's signal of two rate cuts and the slowing of Treasury holdings reduction provided some relief, leading to a 1% rise in the S&P 500.
The United States — Federal Reserve kept its benchmark interest rate unchanged at approximately 4.3% for the second consecutive meeting. Despite this, the United States — Federal Reserve signaled expectations for two rate cuts this year. Simultaneously, it released quarterly economic projections indicating slower economic growth, with a forecast of 1.7% in 2025, and a slight increase in inflation to 2.7% by year-end, exceeding its 2% target. Jerome Powell, Chair of the United States — Federal Reserve, attributed some of this inflation to tariffs imposed by Donald Trump, acknowledging that this could delay progress toward price stability. The United States — Federal Reserve also announced a reduction in the pace of its Treasury holdings runoff, from $25 billion to $5 billion per month, which is expected to keep long-term Treasury interest rates lower. This decision, however, was not unanimous, with Christopher Waller voting against it. The market reaction was mixed, with the S&P 500 rising 1% after Powell's comments, but economists from Morgan Stanley, Goldman Sachs, and Barclays expressed concerns about inflation and slower growth.
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