The president of the federal reserve, Jerome Powell, stops while pronouncing remarks at a press conference following a meeting of the Federal Open Market Committee (FOMC) at the Federal Reserve on March 19, 2025 in Washington, DC.
Kevin Dietsch | Getty images
Officials of the Federal Reserve reduced their economic prospects during the last projections published on Wednesday, seeing the American economy grow at a rate of less than 2%.
The Federal Committee for the Free Rate Setting Market has lowered its collective prospects for economic growth to 1.7%, down compared to the last screening of 2.1% in December. Meanwhile, officials have increased their inflation prospects, seeing the basic prices increase at an annual rate of 2.8%, against the previous estimate of 2.5%. The movements have suggested that the central bank see the risk of a stagflation scenario, where inflation increases as economic growth slows down.
In a press release, the FOMC noted that “uncertainty concerning economic prospects has increased,” adding that the Fed is “attentive to the risks on both sides of its double mandate”.
The fears of an economic slowdown and a reaggeration of inflation increased considerably, because the aggressive prices of President Donald Trump on the main American business partners should increase the prices of bumpy goods and services and expenses.
“Inflation has started to go up now. We are partially thinking in response to prices and there can be a delay in additional progress during this year,” said FED president Jerome Powell during a press conference. “Overall, it is a solid image. Survey data, households and businesses show great significant uncertainty and significant concerns concerning risks.”
For the moment, the Fed is still expecting to make two rate drops for the rest of 2025, according to the median projection, even if the inflation prospects have been increased.
The so-called DOT route indicated that 19 FOMC members, voters and non-voters see the Fed reference rate at 3.9% by the end of this year, equivalent to a target range of 3.75% to 4%. The central bank maintained its key interest rate unchanged in a range between 4.25% to 4.5% on Wednesday.
However, their point of view supported more hawkish in their rate projection, four members seeing any rate change in 2025. At the January meeting, only one official has planned any interest rate change this year.
Here are the latest Fed targets:
– Jeff Cox of CNBC contributed the reports.
