US Fed Reserve Interest Rate Unchanged: Anticipates Two Rate Cut Later in 2025

On March 19, 2025, the US Federal Reserve decided to keep its benchmark interest rate unchanged and indicated that it still anticipates two rate cuts later this year, although the outlook has become more uncertain.

Slower Economic Growth

The Fed has revised its expectations for slower economic growth this year and next, compared to its projections from three months ago, as revealed in its quarterly economic forecasts. The unemployment rate is now expected to rise to 4.4% by the end of the year. Inflation is also expected to tick up slightly, reaching 2.7% by year-end, up from the current 2.5%. Both figures remain above the Fed’s 2% target.

Fed Chairman Anticipates Rate Cut in Year

The Federal Open Market Committee (FOMC) voted to maintain interest rates within the range of 4.25% to 4.5% and to continue reducing the balance sheet. Jerome Powell noted that inflation has increased in part due to tariff responses, which may delay the planned rate cuts further into the year. However, the Fed’s forecast still indicates two quarter-point rate cuts in 2025.

The Fed acknowledged that “uncertainty around the economic outlook has increased,” in a statement issued after its two-day meeting.

These projections highlight the difficult position the Fed faces: higher inflation usually leads to maintaining or even raising interest rates, while slower growth and rising unemployment typically call for rate cuts to encourage borrowing and spending to boost the economy.

Alongside its decision, the Fed updated its rate and economic projections through 2027 and revised its approach to reducing bond holdings.

Surge in US Markets

Following the decision not to change the US Federal Reserve Interest Rate, the US markets saw a broad rally, rising over 1%. The Dow Jones surged by 384 points, the S&P 500 climbed 1.08%, and the NASDAQ rose 1.3%, driven by a strong performance in tech stocks.

Gold Prices Continue to Soar

Gold prices continued to reach new all-time highs after the Federal Reserve interest rate decision, citing moderately high inflation and signs of an economic slowdown. Investors heavily bought yellow metals, pushing gold to a record high of $3,050 per ounce, extending its gains from the previous close.

Conclusion

With the decision to keep interest rates unchanged by the US Federal Reserve, there was a surge seen in the US stock market and gold prices. However, Fed Chairman, Jerome Powell indicated that it still anticipates two rate cuts later this year.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.