Fed Keeps Interest Rates Unchanged, Lowers GDP Forecast


   
Maria Eugenia Garcia
DTN Energy Editor

   HOUSTON, TX (DTN) -- The Federal Reserve maintained its interest rate policy 
unchanged on Wednesday and reiterated its expectation to cut rates twice this 
year.

   "Recent indicators suggest that economic activity has continued to expand at 
a solid pace. The unemployment rate has stabilized at a low level in recent 
months, and labor market conditions remain solid," according to a statement 
from the Federal Open Market Committee FOMC today.

   The FOMC held a meeting on March 18--19, where board members committed to 
supporting maximum employment and returning inflation to 2% over the longer 
run, amid increasing "uncertainty around the economic outlook."

   The Committee also pledged to keep its target range for the federal funds 
rate at 4.25%-4.50% for this year.

   During a news conference, Fed Chair Jerome Powell reiterated that the U.S. 
economy remains strong, and employment is solid. For that reason, the Federal 
Reserve decided to leave its interest rate policy unchanged.

   The Fed lowered its median forecast for U.S. economic growth to 1.7% in 
2025, down from the 2.1% projected in December, according to the FOMC's minutes 
released today.

   The Fed also anticipates an uptick in inflation this year, raising its 
projection for PCE inflation to 2.7%, up from the 2.5% originally predicted in 
December. Meanwhile, PCE core inflation, which excludes food and energy prices, 
is expected to increase to 2.8%, compared to the previous estimate of 2.7%.

   Regarding the unemployment rate, the Fed now predicts 4.4% for this year, up 
from the 4.3% forecasted in December.

   "The Committee would be prepared to adjust the stance of monetary policy as 
appropriate if risks emerge that could impede the attainment of the Committee's 
goals," the FOMC stated.




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