Federal Reserve officials are expected to keep interest rates steady at their upcoming meeting, but may adjust their views on the economy and potentially alter their interest rate forecasts.
The committee’s decision comes as President Donald Trump’s trade policies continue to pose uncertainty. Market pricing suggests that Fed policymakers will maintain the current interest rate level between 4.25%-4.5%. However, they are also expected to drop hints about their future plans for interest rates, inflation, and economic growth.
According to senior economist Dan North at Allianz Trade North America, “There’s no chance of a cut Wednesday… They’re basically saying, ‘We are in no hurry at all now.'” This reflects the prevailing message from Fed Chair Jerome Powell and his colleagues, who have emphasized the need for greater clarity on the Trump administration’s policies.
The public will be watching updates to the Fed’s quarterly projections, including interest rates, gross domestic product, unemployment, and inflation. Based on recent data, the Fed may raise its 2025 outlook for inflation while lowering its GDP projection. The committee’s “dot plot” grid of individual members’ intentions will also provide insight into their views.
Market analysts believe that the Trump tariffs could reignite inflation, particularly if President Trump becomes more aggressive after a global review on April 2. This could lead to the Fed becoming more reluctant to cut interest rates.
The Federal Reserve has been criticized for relinquishing control of macroeconomic policy to the Trump administration. Market volatility and concerns about the direction the FOMC indicates have led some analysts to predict that the Fed may only signal two rate cuts in 2025, with one potential cut delayed until 2026.
Source: https://www.cnbc.com/2025/03/18/the-fed-will-update-its-rate-projections-wednesday-what-to-expect.html