March 19, 2025: Economy Highlights

March 19, 2025: 11:00 p.m.:

The Federal Reserve maintained interest rates at 4.25% to 4.5%, citing increased economic uncertainty and a downgraded growth forecast. Fed Chair Jerome Powell highlighted challenges in assessing inflation impacts from recent tariffs.

Following the Fed's decision, U.S. stocks surged, with the S&P 500 rising 1.1%, the Dow Jones Industrial Average gaining 383 points, and the Nasdaq Composite climbing 1.4%. This rally was attributed to the Fed's steady rate stance and easing bond yields.

The Fed revised its economic projections, lowering the 2025 GDP growth forecast to 1.7% from 2.1% and increasing the inflation projection to 2.7% from 2.5%, raising concerns about potential stagflation.

To manage market liquidity amid debt ceiling uncertainties, the Fed announced plans to slow the pace of its balance sheet reduction, reducing the monthly cap on maturing Treasuries from $25 billion to $5 billion starting April 1.

The ongoing trade tensions, particularly President Trump's tariffs, have contributed to market volatility and economic uncertainty, influencing the Fed's cautious approach and revised economic outlook.