Fed Wrap - Fed holds rate but highlights growing uncertainties
Key takeaways
- The US Federal Reserve held rates steady despite rising uncertainty
- Inflation risks are rising, but economic growth remains resilient
- The bar for rate cuts is high amid political and economic uncertainty
Ryan Weldon, from IFM’s Debt Investments team in New York, features in our Fed Wrap market update videos discussing central bank themes in debt markets, with a particular focus on the US Federal Reserve (Fed).
In this edition, Ryan discusses the outcomes of the March Fed meeting, the updated dot plot and summary of economic projections, and the difficulty the Fed faces in policy decision making through 2026.
At the March meeting, the Federal Reserve held rates, maintaining the upper band of their policy rate at 3.75%, with one dissent in favour of a cut.
The statement was little changed from January and noted that there were risks to both inflation and employment. The notable change to the statement was the addition about the economic uncertainty caused by the conflict in the Middle East. The dot plot was also little changed with the median expectations showing one cut in 2026 and one cut in 2027.
The Fed’s expectations are relatively in line with current market pricing. Between the minimal changes to the statement and dot plot, the releases from the Fed meeting were surprisingly mundane given the geopolitical and economic uncertainties currently challenging markets.
Meet the author
Ryan Weldon
Ryan supports the dealing and portfolio management functions of IFM Investors’ cash and fixed income portfolios in the US. He also assists in the execution of foreign exchange and derivative overlay strategies for internal and external clients.
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