Federal Reserve Holds Target at 4.25% to 4.50% at Its March 2025 Meeting

The Federal Reserve's meeting concluded today with the Fed continue to maintain its target rate at 4.25 to 4.50%.

In the Fed's statement, it cites significant progress in getting inflation to its 2% target, but still remains elevated. In fact, the Fed increased its core inflation projection for all of 2025 from 2.50% to 2.80%. The Fed also reduced its growth forecast for 2025 to 1.70%, and sees growth below 1% in 2026.

Importantly, the Fed removed its statements that risks are balanced on both sides of its mandate. In fact, the Fed clearly sees risks everywhere and a slow down in the economy could cause it to reduce short term borrowing costs quickly and decisively.  But for the moment, that is still not here and the Fed still wants to remain cautious on inflation and cannot be certain to proclaim victory prior to new tariffs potentially going into effect on April 2.

At the same time, The Fed is still guiding to two quarter point rate cuts over the course of 2025. While we may not see a rate cut on May 7, we could see one as early as June 18.