Benchmark interest rates will remain unchanged — keeping the key borrowing rate in a range between 4.25%-4.25% — as the Federal Reserve, in its meeting of the Federal Open Market Committee (FOMC) today (March 19), says the economy is expected to grow more slowly this year and in 2026 compared to how they viewed growth 3 months ago. The Federal Reserve did signal it expects to cut rates later in 2025.
The FOMC, which sets the rates, downgraded its collective outlook for economic growth. A post-meeting statement from FOMC noted an elevated level of ambiguity surrounding the current climate. “Uncertainty around the economic outlook has increased,” the document stated. “The Committee is attentive to the risks to both sides of its dual mandate.”
Fed Chairman Jerome Powell said in a news conference after the meeting that President Donald Trump’s tariffs have started to push up inflation a bit and would likely stall out the progress the central bank has seen in reducing inflation in recent years, according to news reports.
An AP news update by Christopher Rugaber and Alex Veiga, “Federal Reserve sees tariffs raising inflation this year, keeps key rate unchanged,” summarized the highly-anticipated meeting and highlights follow:
“The Fed also now expects the economy to grow more slowly this year and next than it did three months ago, according to a set of quarterly economic projections also released Wednesday. It forecasts growth falling to just 1.7% in 2025, down from 2.8% last year, and 1.8% in 2026. Policymakers also expect inflation will pick up slightly, to 2.7% by the end of 2025 from its current level of 2.5%. Both are above the central bank’s 2% target … Powell underscored that uncertainty around the economy’s outlook is “unusually elevated” and said that the Fed is prepared to be patient and see how the economy evolves before making further moves.
“We’re not going to be in any hurry to move,” Powell said. “We’re well positioned to wait for further clarity and not in any hurry.”
