The US Federal Reserve Keeps Interest Rates Unchanged Amid Uncertainty
The Federal Reserve decided to maintain interest rates with adjustments to growth and inflation expectations amid fears of a slowdown in the US economy.
Federal Reserve Decision:
In its meeting held on March 19, 2025, the US Federal Reserve decided to keep the main interest rate unchanged within the range of 4.25% to 4.5%, indicating a significant rise in economic uncertainty, especially in light of geopolitical tensions and recent trade decisions that negatively affected investor confidence and economic growth expectations.
Adjustments to Economic Expectations:
The Fed made notable adjustments to its economic forecasts, lowering the economic growth expectation for 2025 to 1.7% compared to its previous forecast of 2.1%. In contrast, the central bank raised its inflation rate expectations to 2.7%, up from 2.5% in its previous forecasts, reflecting concerns about the potential for stagflation, characterized by weak growth and rising inflation simultaneously.
Market Reaction:
Following the Fed's announcement, US stock markets saw a significant increase, with the S&P 500 index rising by 1.1%, the Dow Jones Industrial Average increasing by about 383 points, and the Nasdaq Composite advancing by 1.4%.
