{"id":29648,"date":"2025-03-23T14:51:12","date_gmt":"2025-03-23T21:51:12","guid":{"rendered":"https:\/\/essential.construction\/news\/fed-holds-main-rate-steady-forecasts-higher-inflation-slower-growth\/"},"modified":"2025-03-23T14:51:12","modified_gmt":"2025-03-23T21:51:12","slug":"fed-holds-main-rate-steady-forecasts-higher-inflation-slower-growth","status":"publish","type":"post","link":"https:\/\/essential.construction\/news\/fed-holds-main-rate-steady-forecasts-higher-inflation-slower-growth\/","title":{"rendered":"Fed holds main rate steady, forecasts higher inflation, slower growth"},"content":{"rendered":"<p> [ad_1]<br \/>\n<\/p>\n<div>\n<h3>Dive Brief:<\/h3>\n<ul>\n<li><span><span><span><span><span><span>T<\/span><\/span><\/span><\/span><\/span><\/span><span><span><span><span><span><span>he Federal Reserve on Wednesday kept the main interest rate at a range between 4.25% and 4.5% while forecasting higher inflation and slower growth for 2025.<\/span><\/span><\/span><\/span><\/span><\/span><\/li>\n<li><span><span><span><span><span><span>In a median forecast, Fed officials estimated that their preferred measure of inflation \u2014 the core personal consumption expenditures price index less volatile food and energy prices \u2014 will end the year at 2.8%, 0.3 percentage point higher than their December estimate. They also <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.federalreserve.gov\/monetarypolicy\/files\/fomcprojtabl20250319.pdf\" target=\"_blank\"><span><span><span><span><span><span><span><span>downgraded their forecast for economic growth<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span> in 2025 to 1.7% from 2.1% in December. Fed officials continue to expect at least two, quarter-point cuts to the federal funds rate.<\/span><\/span><\/span><\/span><\/span><\/span><\/li>\n<li><span><span><span><span><span><span>Tariffs and other policy shifts by the Trump administration have stirred \u201creally high uncertainty,\u201d Fed Chair Jerome Powell said during a press conference after a two-day policy meeting. \u201cWe have tariffs coming in, we don\u2019t know how big, what speed,\u201d he said. \u201cBut we kind of know there are going to be tariffs, and they tend to bring growth down; they tend to bring inflation up in the first instance.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/li>\n<\/ul>\n<h3>Dive Insight:<\/h3>\n<p><span><span><span><span><span><span>S<\/span><\/span><\/span><\/span><\/span><\/span><span><span><span><span><span><span>ince Fed officials last met in January, consumer surveys and economic data have flashed warning signs of rising inflation risks and slowing growth.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><a rel=\"nofollow noopener\" href=\"https:\/\/www.cfodive.com\/news\/consumer-spending-falls-highlighting-fading-confidence-Trump-inflation-tariff-GDP-economy\/741310\/\" target=\"_blank\"><span><span><span><span><span><span><span><span>Consumer spending shrunk<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span> 0.5% in January and retail sales last month<\/span><\/span><\/span><\/span><\/span><\/span><span><span><span><span><span><span> rose a lower-than-expected 0.2%.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>C<\/span><\/span><\/span><\/span><\/span><\/span><span><span><span><span><span><span>onsumer sentiment has slumped in recent weeks and expectations for higher price pressures have increased, according to surveys by the Conference Board and University of Michigan.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>The dual risk of weakening growth with rising inflation <\/span><\/span><\/span><\/span><\/span><\/span><span><span><span><span><span><span><span>\u2014 <\/span><\/span><\/span><\/span><\/span><\/span><\/span><span><span><span><span><span><span>or \u201cstagflation\u201d <\/span><\/span><\/span><\/span><\/span><\/span><span><span><span><span><span><span><span>\u2014<\/span><\/span><\/span><\/span><\/span><\/span><\/span><span><span><span><span><span><span> stems primarily from policy shifts by the Trump administration, including higher tariffs, widespread layoffs of federal employees and plans for mass deportations, according to economists.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cThe new administration is in the process of implementing significant policy changes in four distinct areas <\/span><\/span><\/span><\/span><\/span><\/span><span><span><span><span><span><span><span>\u2014<\/span><\/span><\/span><\/span><\/span><\/span><\/span><span><span><span><span><span><span> trade, immigration, fiscal policy and regulation,\u201d Powell said. \u201cIt is the net effect of these policy changes that will matter for the economy and for the path of monetary policy.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cWhile there have been recent developments in some of these areas, especially trade policy, uncertainty around the changes and their effects on the economic outlook is high,\u201d he said. \u201cAs we parse the incoming information, we&#8217;re focused on separating the signal from the noise\u201d when considering changes to monetary policy.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>President Donald Trump and his top advisors have said that their initiatives may lead to short-term economic disruption while strengthening U.S. manufacturing and the economy over the long term.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cTariffs are about making America rich again and making America great again,\u201d Trump said <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.cnn.com\/interactive\/2025\/03\/politics\/transcript-speech-trump-congress-annotated-dg\/\" target=\"_blank\"><span><span><span><span><span><span><span><span>in his state of the union<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span> address this month. \u201cThere&#8217;ll be a little disturbance. We&#8217;re okay with that. It won&#8217;t be much.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Goldman Sachs last week downgraded its forecast for gross domestic product growth in 2025 to 1.7% from 2.4% at the start of the year.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cOur trade policy assumptions have become considerably more adverse and the [Trump] administration is managing expectations towards tariff-induced, near-term economic weakness,\u201d Goldman Sachs Chief Economist Jan Hatzius said in a research note.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>The U.S. tariff rate will likely rise 10 percentage points, double the previous forecast by Goldman Sachs and five times more than during the first Trump administration, Hatzius said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>The Atlanta Fed on Tuesday forecast that <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.atlantafed.org\/cqer\/research\/gdpnow.aspx?utm_medium=email&amp;utm_source=mailchimp&amp;utm_campaign=cqer-research\" target=\"_blank\"><span><span><span><span><span><span><span><span>gross domestic product will likely shrink<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span> at a 1.8% annual rate during the first quarter. The regional Fed bank on March 7 predicted a 1.6% contraction during Q1.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Powell said he sees underlying strength in the economy.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cGrowth looks like it&#8217;s maybe moderating a bit, consumer spending moderating a bit, but still at a solid pace,\u201d Powell said, noting that unemployment is at the comparatively low level of 4.1%, with job creation \u201cat a healthy level.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cInflation has started to move up now, we think, partly in response to tariffs, and there may be a delay in further progress over the course of this year,\u201d he said, adding \u201coverall, it&#8217;s a solid picture.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Powell\u2019s comments echoed a post-meeting statement by the Federal Open Market Committee.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cRecent indicators suggest that economic activity has continued to expand at a solid pace,\u201d the FOMC<\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.federalreserve.gov\/monetarypolicy\/files\/monetary20250319a1.pdf\" target=\"_blank\"><span><span><span><span><span><span><span><span> said in a statement<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span>, while noting that \u201cinflation remains somewhat elevated\u201d and \u201c<\/span><\/span><\/span><\/span><\/span><\/span><span><span><span><span><span><span>uncertainty around the economic outlook has increased.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>There has been no sign of a sudden jump in prices.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Inflation last month rose less than expected, the Bureau of Labor Statistics said last week. After gaining 0.4% in January, the core consumer price index excluding volatile food and energy prices <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.bls.gov\/news.release\/cpi.nr0.htm\" target=\"_blank\"><span><span><span><span><span><span><span><span>increased 0.2% in February<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span>, fueled largely by a 0.3% rise in shelter costs and 0.9% increase in used cars and trucks.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Still, Powell has cautioned for months that the path back down to the Fed\u2019s 2% inflation target will likely be bumpy.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cWe see this in both market and survey based measures and survey respondents, both consumers and businesses, are mentioning tariffs as a driving factor beyond the next year or so,\u201d Powell said, referring to the outlook for price pressures. \u201cHowever, most measures of longer term [inflation] expectations remain consistent with our 2% inflation goal.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Fed officials see no urgency to adjust borrowing costs and can recalibrate monetary policy to handle either side of the central bank\u2019s dual mandate to ensure price stability and maximum employment, Powell said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cWe do not need to be in a hurry to adjust our policy stance, and we are well positioned to wait for greater clarity,\u201d he said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<\/p><\/div>\n<p>[ad_2]<br \/>\n<br \/><a href=\"https:\/\/www.constructiondive.com\/news\/fed-holds-main-rate-steady-forecasts-higher-inflation-slower-growth\/743029\/\" rel=\"nofollow noopener\" target=\"_blank\">This article was originally posted at Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>[ad_1] Dive Brief: The Federal Reserve on Wednesday kept the main interest rate at a range between 4.25% and 4.5% &#8230; <a title=\"Fed holds main rate steady, forecasts higher inflation, slower growth\" class=\"read-more\" href=\"https:\/\/essential.construction\/news\/fed-holds-main-rate-steady-forecasts-higher-inflation-slower-growth\/\" aria-label=\"Read more about Fed holds main rate steady, forecasts higher inflation, slower growth\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[457],"tags":[],"class_list":["post-29648","post","type-post","status-publish","format-standard","hentry","category-construction-dive","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33"],"_links":{"self":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/posts\/29648","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/comments?post=29648"}],"version-history":[{"count":0,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/posts\/29648\/revisions"}],"wp:attachment":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/media?parent=29648"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/categories?post=29648"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/tags?post=29648"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}