The Federal Reserve will hold interest rates steady at 4.25%-4.5% following a much-anticipated meeting yesterday, a decision that comes amid economic uncertainty driven by trade standoffs in recent weeks. The board also signaled it would still target two cuts this year, potentially lowering rates to 3.75%-4.0%.
The group also lowered its projections for growth of the US economy in 2025, projecting a gross domestic product increase of 1.7%—down from 2.1% following a December meeting—and upped its estimate of core price inflation to 2.8%. Reports from the meeting also suggested the Fed would slow the drawdown of nearly $6.8T in assets, a portfolio largely stockpiled during stimulus efforts over the past decade and a half. See an overview of how the Federal Reserve works here.
Stocks were buoyed on news that two rate cuts were likely coming at some point this year (S&P 500 +1.1%, Dow +0.9%, Nasdaq +1.4%). See historical interest rates here.
