Clarity and Uncertainty March 2025

On Wednesday, March 18, the Federal Reserve (FED) held the Federal Funds interest rate steady at 4.25%-4.50% but adjusted the inputs used in its economic forecast. Higher tariff expectations led the FED to increase their PCE inflation forecasts by 0.3% to 2.8% for 2025 while at the same time downgrading their forecasts of GDP growth by 0.4% to 1.7% for the year. The FED continues to project two rate cuts in 2025 in their dot plot, but there remains much uncertainty around the timing of the expected cuts. Federal Reserve Chairman Jerome Powell made it clear that the Federal Open Market Committee (FOMC) is not in a hurry to cut rates and prefers to wait for further clarity on tariffs and other policies that may impact economic forecasts.