At its scheduled Federal Open Market Committee (FOMC) meeting on March 19th, the US Federal Reserve announced that it will maintain the target range for the federal funds rate at 4.25% to 4.50%.

The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities. Beginning in April, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25 billion to $5 billion. The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion.

Recent economic indicators show that the US economy has continued to expand at a solid pace. The Federal Reserve Board projects that GDP will grow 1.7% in 2025, 1.8% in 2026, and 1.8% in 2027, a downward revision from the December forecast. Labour conditions remain solid and unemployment has stabilized at low levels. Unemployment rate is projected to be at 4.4% in 2025, 4.3% in 2026, and 4.3% in 2027, an upward revision for 2025 from the December forecast. Inflation remains somewhat elevated above the 2% target. PCE inflation is forecast to be 2.7% in 2025, 2.2% in 2026 and 2.0% in 2027.

The Committee seeks to achieve maximum employment and returning inflation to 2% over the long run. However, the economic outlook is uncertain, and the Committee is attentive to risks to both sides of its dual mandate. The Committee will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments to achieve its goals.

The next scheduled FOMC meeting will be held on May 6-7, 2025.

Source: US Federal Reserve, FOMC Press Release; FOMC Economic Projections