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March 19, 2025
The Fed, via its Federal Reserve press release, noted that, “Recent data indicates that economic activity is growing steadily. The unemployment rate has remained low, and the labour market is strong. However, inflation is still somewhat high. The Fed aims to achieve maximum employment and a 2% inflation rate over the long term. There is increased uncertainty about the economic outlook, and the Fed is mindful of the risks to its dual mandate.
To support its goals, the Fed decided to keep the federal funds rate target range at 4.25% to 4.5%. The Fed will carefully evaluate incoming data, the evolving economic outlook, and the balance of risks when considering future adjustments to the target range. The Fed will continue to reduce its holdings of Treasury securities, agency debt, and mortgage-backed securities. Starting in April, the Fed will slow the pace of reducing its securities holdings by lowering the monthly redemption cap on Treasury securities from $25 billion to $5 billion, while maintaining the cap on agency debt and mortgage-backed securities at $35 billion.
The Fed is committed to supporting maximum employment and bringing inflation back to its 2% target. It will monitor incoming information and adjust its monetary policy stance as needed to address any risks that could hinder its goals. The Fed’s assessments will consider a wide range of information, including labour market conditions, inflation pressures and expectations, and financial and international developments.”
key economic projections from the Federal Reserve’s briefing today, March 19, 2025:
- GDP Growth: Real GDP growth is projected to be 1.7% for 2025, down from the previous estimate of 2.1%.
- Unemployment Rate: The unemployment rate is expected to remain stable at around 4.3% through 2025.
- Inflation: Inflation is projected to be 2.7% for 2025, slightly higher than the previous forecast.
- Federal Funds Rate: The median projection for the federal funds rate is 3.9% for 2025.
Federal Funds Target Rate
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