03/20/2025

Fed Keeps Policy Rate Outlook Intact

Meanwhile, the agency predicts growth slowdown, temporary inflation jump

The Federal Reserve held interest rates steady on Wednesday, as expected, but U.S. central bank policymakers indicated they still anticipate reducing borrowing costs by half a percentage point by the end of this year in the context of slowing economic growth and, eventually, a downturn in inflation.

Taking stock of the Trump administration's rollout of tariffs, Fed officials actually marked up their outlook for inflation this year, with their preferred measure of price increases expected to end the year at 2.7 percent versus the 2.5 percent pace anticipated in December. The Fed targets inflation at 2 percent.

But they also marked down the outlook for economic growth for this year from 2.1 percent to 1.7 percent, with slightly higher unemployment by the end of this year.

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