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  5. US Fed holds interest rates steady; check top highlights and full text of monetary policy statement by FOMC

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US Fed holds interest rates steady; check top highlights and full text of monetary policy statement by FOMC

Upstox
By Upstox News Desk

3 min read | Updated on March 20, 2025, 08:05 IST

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SUMMARY

The Federal Reserve kept its key borrowing rate steady in a range between 4.25%-4.5% and indicated that cuts are likely later in the year. In a press conference, Fed chair Jerome Powell said that recession risks have moved up, but it is "not high."

Federal Reserve Chair Jerome Powell said that a "good part" of high inflation prediction is coming from tariffs. | Image: X/@FederalReserve

Federal Reserve Chair Jerome Powell said that a "good part" of high inflation prediction is coming from tariffs. | Image: X/@FederalReserve

The US Federal Reserve on Wednesday held its benchmark lending rate unchanged between 4.25% and 4.5%. It stated that the economic activity has expanded at a solid pace, but inflation has remained "somewhat elevated."

Federal Reserve Chair Jerome Powell led Federal Open Market Committee (FOMC) said that uncertainity around the economic outlook had increased.

Key takeaways from US Fed meeting outcome

  • The Federal Reserve kept its key borrowing rate steady in a range between 4.25%-4.5% and indicated that cuts are likely later in the year.
  • Of 12 members of the FOMC, 11 members voted in favour of the decision.
  • In a press conference, Powell said that recession risks have moved up, but it is "not high."
  • The Fed chair said that the central bank's forecast related to less economic growth and higher inflation in 2025 offset each other. “At the December meeting, the median was two cuts...Weaker growth but higher inflation...kind of balance [each other] out,” he said, while stating that forecasts are "highly uncertain."
  • He said that a "good part" of high inflation prediction is coming from tariffs.
  • Acknowledging that the US economy is "strong overall", Powell said that there are signs of weakness among consumers.

Federal Reserve issues FOMC statement; check full text

"Recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate has stabilized at a low level in recent months, and labour market conditions remain solid. Inflation remains somewhat elevated.
The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run. Uncertainty around the economic outlook has increased. The Committee is attentive to the risks to both sides of its dual mandate.
In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4.25% to 4.50%. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. Beginning in April, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25 billion to $5 billion. The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2% objective.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments."
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Upstox News Desk is a team of journalists who passionately cover stock markets, economy, commodities, latest business trends, and personal finance.

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