United States: Central Bank leaves rates unchanged in March
Latest bank decision: At its meeting on 19 March, the Central Bank decided to maintain the target range for the federal funds rate at 4.25–4.50%.
Uncertain outlook and high prices drive hold: The Bank decided to stay put in light of inflation which is still above the 2.0% target despite dipping in February, and an increase in economic uncertainty under Donald Trump’s presidency.
Rate cuts still the base scenario: The Central Bank continued to anticipate it would cut rates by 50 basis points this year, unchanged from its previous forecasts in December. The Consensus among our panelists is for less than 50 basis points of cuts, with several panelists now seeing the Fed on hold for all of 2025 in light of upside risks to prices. Uncertainty over the interest rate outlook is unusually large due to Trump’s volatile trade and domestic economic policy.
Panelist insight: EIU analysts see three 25 basis-point rate cuts this year:
“Ultimately, we believe that uncertainty will be the undoing of growth, which will force the Fed’s hand, as we expect slower growth (now 1.4% in 2025 in our forecast, revised down from 2% previously) and one more rate cut this year than the FOMC is currently projecting.”
In contrast, United Overseas Bank’s Alvin Liew is more hawkish:
“While we acknowledge the downside risk to growth has increased, we continue to err on the more cautious side towards inflation risk. We continue to hold our view of only one 25-bps cut in 2Q25 (likely Jun FOMC) and stay on hold for rest of the year at 4.25%.”