The FOMC statement said that recent indicators suggest that economic activity has continued to expand at a solid pace.
The Federal Reserve’s Federal Open Market Committee (FOMC) held interest rates steady and maintained its target federal funds rate range at 4.25-4.5%, as was widely anticipated before Fed Chair Jerome Powell’s announcement on Wednesday, March 19, 2025.
The economy has some mixed signs. The projection for GDP growth in 2025 is 1.7%, which is down 0.4 percentage point from the last projection in December 2024. Meanwhile, inflation is expected to remain at 2.7% this year and fall 2.2% next year. A big question is whether the prospective drop in inflation will happen is the economy’s reaction to Trump’s tariffs, which typically cause higher prices initially. Further, there are other factors that are causing uncertainty in markets, including the debt ceiling, and fiscal policy. Markets initially reacted favorably to Wednesday’s news from the Fed.
The FOMC reports that recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation remains somewhat elevated, but it is down significantly from 2022, when the annual inflation rate was 8%.
So while the Fed continues to pursue its dual goals of maximum employment and inflation at the rate of 2% over the longer run, uncertainty about the economy has increased. The FOMC will adjust monetary policy if risks emerge that could impede the attainment of its goals. The assessments consider a wide range of data, including labor market conditions, inflation pressures and expectations, financial markets, and international developments.Potential Dangers That Could Impact Interest Rates
Chair Powell said during his press conference that there has been “moderation in consumer spending” and that The Fed anticipates that tariffs could put more upward pressure on prices. The University of Michigan Survey of Consumers figure for March was 57.
