The Fed announced its interest rate decision.

19.03.2025 22:30

The U.S. Federal Reserve kept the policy interest rate unchanged in line with market expectations, maintaining it at a level of 4.25-4.50 percent.

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The Federal Reserve (Fed) announced its critical interest rate decision, which has drawn the attention of global markets.

FED KEPT INTEREST RATE UNCHANGED

The Fed kept the policy interest rate unchanged within the expected range of 4.25-4.50 percent. In a statement from the Fed, it was noted that the monetary policy decision was made with 11 votes against 1. It was reported that Christopher Waller supported keeping the policy interest rate unchanged but preferred to maintain the current pace of reduction in securities assets. The statement indicated that the decision was made to keep the federal funds rate target range at 4.25-4.50 percent to support the bank's objectives.

FED HAD PAUSED INTEREST RATE CUTS IN JANUARY

With the progress recorded in inflation, the Fed had cut interest rates for the first time in four years in September last year, reducing the policy interest rate by 50 basis points. In November and December of last year, the Fed also lowered the policy interest rate by 25 basis points each time, and in January, it paused the interest rate cuts it had made in three consecutive meetings last year. In the U.S., inflation, which reached an annual rate of 9 percent in June 2022, the highest level since 1981, was recorded at 2.8 percent on an annual basis in February.

YEAR-END POLICY INTEREST RATE FORECAST REMAINS AT 3.9 PERCENT

In its economic forecasts, the Fed kept its forecast for the federal funds rate at 3.9 percent, as it had predicted last December for the end of this year. Accordingly, the Fed left its forecasts for the federal funds rate for 2026 and 2027, as well as its long-term average interest rate expectations, at 3.4 percent, 3.1 percent, and 3 percent, respectively. These forecasts signaled that the Fed continues to expect two interest rate cuts in 2025.

CORE INFLATION FORECAST INCREASED

The bank's inflation forecasts were raised from 2.5 percent to 2.7 percent for this year, from 2.1 percent to 2.2 percent for 2026, while remaining at 2 percent for 2027. The forecasts for core inflation, which excludes volatile energy and food prices, were revised from 2.5 percent to 2.8 percent for this year, while remaining at 2.2 percent for 2026 and 2 percent for 2027.

GROWTH FORECASTS REVISED DOWNWARD

The growth forecast for the U.S. economy was lowered from 2.1 percent to 1.7 percent for this year, from 2 percent to 1.8 percent for next year, and from 1.9 percent to 1.8 percent for 2027. The unemployment rate forecasts were kept at 4.3 percent for this year, next year, and 2027.