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E-mail Xinhua, March 20, 2025
U.S. Federal Reserve Chair Jerome Powell attends a press conference in Washington, D.C., the United States, on March 19, 2025. [Photo/Xinhua]
The U.S. Federal Reserve on Wednesday left target range for the federal funds rate unchanged at 4.25 percent to 4.5 percent, amid rising inflation concerns due to the Trump administration's tariff policies.
"Uncertainty around the economic outlook has increased. The Committee is attentive to the risks to both sides of its dual mandate," the Federal Open Market Committee (FOMC), the central bank's policy-setting body, said in a statement after a two-day meeting.
"In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent," the statement said.
Beginning in April, the FOMC will slow the pace of decline of its securities holdings, indicating that the Fed is choosing not to reduce its balance sheet as quickly -- a measure taken during times when the economy might need more support or liquidity.
According to the Fed's latest quarterly summary of economic projections released Wednesday, the median projection for personal consumption expenditures (PCE) inflation among Fed officials is 2.7 percent by year-end, up from 2.5 percent in the December projection. Median projection for core PCE inflation among Fed officials is 2.8 percent by year-end, up from 2.5 percent in the December projection.
When asked how much of the expected higher inflation is due to tariffs, Fed Chair Jerome Powell said at a press conference Wednesday afternoon, "a good part of it," while noting that it would be "very difficult" to have a precise assessment of how much of inflation is coming from tariffs.
"Looking ahead, the new Administration is in the process of implementing significant policy changes in four distinct areas: trade, immigration, fiscal policy, and regulation. It is the net effect of these policy changes that will matter for the economy and for the path of monetary policy," Powell told reporters.
"While there have been recent developments in some of these area, especially trade policy, uncertainty around the changes and their effects around the economic outlook is high," said the Fed chief.
The Fed's latest summary of economic projections also showed that median projection for gross domestic product (GDP) growth in 2025 is 1.7 percent, down from 2.1 in the December projection, indicating that Fed officials now anticipate slower economic growth amid higher uncertainty.
As the tariff turmoil escalates and the risks of inflation rise once again, economists and market participants are increasingly concerned about whether the U.S. economy will fall into a recession.
When asked about recession risks, Powell said that a number of forecasters have raised their possibility of a recession somewhat, but "still at relatively moderate levels."
