US Fed Meeting highlights: Surveys hint at tariffs driving inflation expectations; recession odds have risen, says Powell

US Fed chief Jerome Powell on March 19 said the economic activity was looking strong, but the surveys conducted by the Central bank showed weak sentiments, party because of tariffs. He also said that the forecasts have considered the tariff retaliation by other countries on US.

US Fed chief Jerome Powell on March 19 said the odds of recession in America have gained but they are not high. Powell further said that with tariffs, the progress in achieving the inflation target could see a delay.

The Fed said that, beginning in April, it will lower the monthly cap on the amount of Treasuries on its balance sheet that it allows to mature without being reinvested, to $5 billion from $25 billion. It will leave the cap on mortgage-backed securities unchanged at $35 billion. Waller preferred to continue the current pace.

Various officials noted during the committee’s January meeting that it might be appropriate to consider pausing or slowing the Fed’s balance-sheet runoff until the federal government is no longer up against the debt ceiling, the statutory limit for outstanding Treasury debt. The US hit that limit in January.

The Fed first started slowing the pace at which it shrinks its portfolio of assets in June — a bid to ease potential strain on money market rates.

It is very uncertain as of now. We are in contact with industry and banks and do understand that sentiment has fallen. However, the economy is healthy as of now. We have kept two rate cuts for this year because we see high inflation and weaker economy.

In their fresh economic forecasts, officials raised the median estimate for so-called core inflation, which strips out volatile food and energy prices, at the end of this year to 2.8% from 2.5%. Their outlook for 2025 economic growth cooled to 1.7% from 2.1%.

They raised their estimate for unemployment to 4.4% by the end of this year, from the 4.3% they saw in December.

New rate projections showed a narrow majority of Fed officials penciled in half a percentage point in rate cuts this year. That implies two quarter-point rate reductions, the same number as officials estimated when they last issued projections in December.

Jerome Powell said the impact of tariffs on inflation is difficult to assess currently. However, the surveys as of now show that tariffs are driving inflation expectations. He said that inflation has started to move up partly because of tariffs.

US Federal Reserve Chairman Jerome Powell said tariffs were responsible for driving inflation expectations.

Inflation remains elevated against target of 2%, says Powell

US Fed decided to leave policy interest rate unchanged after reviewing economic activity, says Powell

The US Fed on March 19 sharply reduced median forecast of 2025 GDP growth to 1.7 percent vs 2.1 in December. The rate-setting panel also projected an unemployment rate of 4.4 percent for 2025.

US Federal Reserve on March 19 left the benchmark rate unchanged at the target range of 4.25% to 4.5% as the FOMC said "uncertainty" around economic outlooks has gained in the last few weeks. The rate setting panel also said inflation is set to surge.

US Federal Reserve decided to keep the interest rate unchanged at 4.25 percent to 4.5 percent range. However, the rate setting committee decided to cut the 2025 GDP growth projection and said the inflation is set to rise.

US Federal Reserve Chairman Jerome Powell will soon announced FOMC's rate decision. The speech is set to begin at 11:30 PM IST.

Stocks climbed, bonds fell and the dollar outperformed most major currencies as traders braced for the Federal Reserve’s interest-rate decision, following a market turmoil that shed trillions of dollars from American equities amid economic jitters.

The rebound in the S&P 500 was led by recently battered megacaps like Tesla Inc. and Nvidia Corp. The options market is pricing a 1.2% move in the stock benchmark in either direction - up from an average of 0.8% for Fed Days in the past year, according to data compiled by Citigroup Inc. Despite the gains in equities, Treasuries saw a slightly more “hawkish setup,” with a bigger increase in shorter-term US yields relative to the rest of the curve.

Emerging-market currencies were mostly down on Wednesday, with traders turning cautious ahead of the Federal Reserve’s interest rate decision, while a massive selloff in the Turkish lira shook markets across Eastern Europe.

US interest rates are expected to remain on hold this afternoon, as markets weigh the impact of President Donald Trump’s trade policies on the world’s largest economy. The Bloomberg dollar index climbed for the first time in four days ahead of the decision.

Gold prices were little changed on Wednesday after touching a record level earlier in the day on continued safe-haven demand, as investors awaited the U.S. Federal Reserve's interest rate decision due later in the day.

Spot gold remained unchanged at $3,034.12 an ounce as of 12:04 p.m. ET (1604 GMT). Bullion surged to an all-time high of $3,045.24 earlier in the session, marking its 15th record peak this year. U.S. gold futures added 0.1% to $3,042.90.

Bond investors will look for Federal Reserve Chair Jerome Powell’s Wednesday remarks to keep up the momentum behind a rally in the $29 trillion Treasury market.

US government debt has returned 2.4% so far this year, pushing yields to their 2025 lows as the equity market sold off and President Donald Trump’s tariff agenda drew reprisals from trade partners — which led to forecasts for less economic growth and a resurgence of inflation.

While Powell said “the economy’s fine” two weeks ago, traders will scrutinize his comments — after the Fed wraps up its two-day March meeting — and officials’ revised forecasts, known as the dot-plot, for cracks in that view.

Wall Street indices shrugged off jitters and inched higher in opening trade on March 19 while investors await the Federal Reserve's monetary policy decision and Chair Jerome Powell's outlook on rate cuts and growth forecasts.

At the opening bell, the S&P 500 climbed 0.6 percent, while the Nasdaq Composite advanced 1 percent. The Dow Jones Industrial Average gained 212 points, or 0.5 percent.

The two-day FOMC meeting started from March 18 and will end today i.e March 19, 2025. The critical announcement regarding the interest rate will be made on March 19 at 2 p.m. ET. (11:30 pm IST). Projections of the Federal Open Market Committee will also be released along with the interest rate decision. After the FOMC meeting ens, US Fed Chair will hold a press conference at 2:30 p.m. ET (1:00 am IST, Thursday).

Where to watch March FOMC Meet?

At Moneycontrol, we will bring you all the latest buzz on US Fed rate announcement. Additionally, FOMC's official channels will host the presser after the meeting concludes. Read more

Federal Reserve officials will likely hold interest rates steady when they meet Wednesday, buying time to assess how President Donald Trump’s policies impact an economy facing both lingering inflationary pressures and mounting growth concerns.

Fresh tariffs from the Trump administration, paired with retaliatory action from US trade partners, have dented consumer sentiment and fanned Americans’ expectations for future inflation. And with some levies getting postponed shortly after being announced, it’s unclear how the trade war will ultimately shape the economy.

The uncertainty will likely keep policymakers in a wait-and-see mode, reluctant to wed themselves to a particular path of policy.

US equity futures edged higher and the dollar strengthened as investors looked ahead to the Federal Reserve’s policy decision for greater clarity on the outlook for the economy and interest rates.

Futures on the S&P 500 slipped 0.2% while those on the Nasdaq 100 gained 0.3%, signaling a bounce from Tuesday’s losses. Technology stocks were led higher by Tesla Inc. which rose as much as 3.7% after the electric-vehicle maker received California’s approval to start carrying passengers. Cantor Fitzgerald upgraded its recommendation on the stock which has slid almost 45% this year.

Market gains are being held in check, however, by signs that President Donald Trump’s trade tariff policies are starting to weigh on economic growth and consumer sentiment. Authorities have also signaled they are not prepared to step in to support equity markets.

The US Federal Reserve is widely expected to keep the federal funds rate unchanged at its current range of 4.25–4.50 percent in its second monetary policy meeting of the year, scheduled for 18–19 March 2025. Read more