As expected, the US Federal Reserve left its benchmark Fed Funds Rate Rate Steady with 4.25% -4.50% Wednesday, the second consecutive break since three equal efforts to the end of 2024.
However, Fed’s quarterly economic projections showed a sharp decline in expectations of economic growth, with the GDP increase in 2025 now being seen at only 1.7% against 2.1% at the December forecast. The growth prospects for 2026 and 2027 were also trimmed.
“Uncertainty about the economic prospects has risen,” Fed said in an accompanying statement, which is probably a reference to the riot of the customs regime being threatened by President Trump.
Alongside slow growth, core PCE inflation is now seen at 2.8% this year against the previous 2.5% projection. The core inflation prospects for 2026 and 2027 were left to 2.2% and 2.0% respectively.
“Dot -Plot” -which shows FOMC members’ prospects for where the interest rate may be on the way -still sees the Fed -Fund’s rate, which ends this year at 3.9%, the same as December’s forecast. The final FED funds for 2026 and 2027 are expected to continue with 3.4% and 3.1% respectively.
Fed also said it would start to slow down the pace of securities runoff from its balance-so-called quantitative tightening on April 1st. The fall in the Treasury paper is then trimmed to just $ 5 billion from $ 25 billion earlier.
Bitcoin (BTC) was unstable in the minutes immediately after release, but led lower at the press time to $ 83,500 against just over $ 84,000 before the news.
US shares continue to have solid winnings, and the 10-year-old Treasury has dipped two basic points to 4.28%. Gold, the star too late among asset classes, remains near a record high of $ 3,048 per Ounce.
Risk assets have been beaten over the past few weeks as increasing concern over President Trump’s customs threats and its perceived influence on inflation and economic growth weighs in investor mood. Fed, who turned Hawkish at the December and January meetings, also slowed down hope for looser financial conditions in the short term, which was headwinds for cryptocurrencies and shares.
Fed -Chairman Jerome Powell will speak at. 14:30 Eastern Time (18:30 UTC) with dealers monitoring the press conference for further clues from decision makers’ views on monetary policy.
