The Federal Reserve held its benchmark interest rate on Wednesday and acknowledged growing economic "uncertainty," producing revised projections that anticipate higher inflation and unemployment rates this year than previously expected.
Why It Matters
The Federal Open Market Committee meeting took place amid President Donald Trump's implementation and promise of several economic policies, including the widespread trade tariffs and deep reductions in federal government spending.
Trump, who won the popular vote and electoral college in the 2024 presidential election, largely campaigned on a platform vowing to improve the U.S. economy and immigration.
The threat, imposition and subsequent pauses of tariffs have caused significant market volatility. A prediction model from global financial services firm JPMorgan Chase shows the likelihood of an economic downturn has risen significantly.
The president previously said he wanted the Federal Reserve to cut interest rates.
What To Know
In its latest quarterly economic projections, the Fed lowered its growth outlook, forecasting a slower economy than it projected three months ago. It predicts 1.7 percent gross domestic product (GDP) growth this year, which is down from 2.1 percent previously predicted in December.
The central bank also expects the unemployment rate to rise to 4.4 percent and inflation to edge up to 2.7 percent by year's end.
"Uncertainty around the economic outlook has increased," the Fed said in a statement released after its two-day meeting. There are expected to be two rate cuts this year.
This marks the second consecutive meeting where the Fed has kept its benchmark rate at 4.3 percent, opting to pause and assess the impact of Trump administration policies on the economy.
Some economists predict that Trump's tariffs will temporarily drive up inflation, while deregulation efforts could lower costs and ease price pressures.
What People Are Saying
Federal Reserve chair Jerome Powell told reporters: "It is going to be difficult to have a precise assessment of how much inflation is coming from tariffs."
President Donald Trump told reporters on Air Force One on Sunday: "April 2 is a liberating day for our country, because we're going to be getting back a lot of the wealth that we so foolishly gave up to other countries."
U.S. Commerce Secretary Harry Lutnick during a mid-March appearance on NBC News' Meet the Press said: "There's going to be no recession in America."
He later said: "We're going to see, over the next two years, the greatest set of growth coming from America as Americans. You saw at 1.3 trillion of new investments coming in America that, think of all those jobs, and remember, each trillion of investment in America is 1 percent of growth, GDP, so Donald Trump is bringing growth to America. I would never bet on recession. No chance."
What Happens Next
While some tariffs are already in place, a wave of retaliatory and sector-specific ones are set to take effect on April 2.
Reporting by the Associated Press contributed to this story.
Update 3/19/25, 3:46 p.m. ET: This article has been updated with additional information.
fairness meter
About the writer
Mandy Taheri is a Newsweek reporter based in Brooklyn. She joined Newsweek as a reporter in 2024. You can get ... Read more