Federal Reserve Kicks Off March Policy Meeting—Here’s What to Expect

Inflation, tariffs, and economic growth are expected to dominate the post-meeting press conference.

Federal Reserve Chairman Jerome Powell testifies before the House Committee on Monetary Policy in Washington on Feb. 12, 2025. Madalina Vasiliu/The Epoch Times

The Federal Reserve kicked off its two-day March policy meeting on March 18.

After lowering interest rates by a full percent since September 2024, the U.S. central bank paused its easing cycle in January amid a resurgence of inflation and policy uncertainty. Fed Chair Jerome Powell has conveyed that he and his colleagues are not in a hurry to lower interest rates.

Of course, since the institution last met in January, much has transpired, from increasing recession fears to turmoil in the U.S. stock market.

Could the Fed telegraph a policy response soon?

Here is what to expect at the end of this month’s Federal Open Market Committee (FOMC) meeting.

The Wait-and-See Approach Persists

For the financial markets, the conclusion of this month’s gathering is a no-brainer: The U.S. central bank will leave monetary policy alone.

According to the CME FedWatch Tool, traders overwhelmingly expect the benchmark federal funds rate to remain unchanged for the second straight meeting at a range of 4.25 and 4.5 percent.

“The Federal Reserve will remain firmly planted on the sidelines at this week’s meeting,“ said Greg McBride, chief financial analyst at Bankrate, in a statement to The Epoch Times. ”Stubborn inflation and recent economic uncertainty will make them ever more data-dependent in the coming weeks and months.”

The futures market is not anticipating the next quarter-point rate cut until the June meeting.

A chorus of Fed officials have indicated they are content with holding interest rates higher for longer.

Kansas City Fed President Jeffrey Schmid, appearing before a U.S. Department of Agriculture event late last month, stated that he is “not willing to take any changes” by further reducing restraint.

While recent consumer surveys have highlighted ballooning inflation expectations, they could be noise rather than signals for the economic path ahead.

“But with inflation just recently at a 40-year high, now is not the time to let down our guard,” Schmid said in prepared remarks.

“It could be argued that some of the factors driving up inflation expectations are likely one-off transitory developments, but again given recent experience, I am not willing to take any chances when it comes to maintaining the Fed’s credibility on inflation.”

Consumers’ inflation forecasts have rocketed in recent months. The University of Michigan’s March Consumer Sentiment Index, for example, reported the one-year outlook soaring to 4.9 percent from 4.3 percent.

Post-Meeting Press Conference

Over the last few years, U.S. stocks have gyrated during Powell’s post-meeting press conference.

“The press conference to follow may be must-see-TV,” said Jay Woods, chief global strategist at Freedom Capital Markets, in a note emailed to The Epoch Times.

Powell will likely face questions surrounding inflation, tariffs, and growth prospects. If his recent public appearances are anything to go by, the central bank chief could express that the Fed will not take action until the data confirm further progress toward achieving the institution’s 2 percent inflation target.

Comments by Federal Reserve Chair Jerome Powell appear on a bank of screens on the floor of the New York Stock Exchange on Nov. 7, 2024. Richard Drew/AP Photo

Recent inflation reports could relieve the Federal Reserve following the uptick in price pressures from September 2024 to January.

The February Consumer Price Index (CPI) report showed the headline annual inflation rate slowing to 2.8 percent. Additionally, core inflation, which strips out the volatile energy and food categories, eased to 3.1 percent for the first time since April 2021.

Last month’s Producer Price Index (PPI) was flat at 0 percent, and core wholesale prices fell 0.1 percent. PPI readings depict what businesses pay for goods and services that could eventually be passed onto consumers and typically serve as a precursor to future consumer inflation trends.

Early estimates for next month’s key inflation reports suggest further disinflation trajectories.

According to the Cleveland Fed’s Inflation Nowcasting model, the annual headline inflation and core inflation rates are expected to slide toward 2.5 percent and 3 percent, respectively.

“Speaker Powell should face a barrage of questions about future cuts. Given the softening data last week in the CPI and PPI with the backdrop of a potential tariff impact and a rise in unemployment, it will be interesting to see what Powell’s and the committee’s focus will be,” Woods said.

Reporters could inundate Powell with questions about President Donald Trump’s immigration and trade policy adjustments and their effects on the economy and labor markets.

While Powell has refrained from explicitly discussing the new administration’s changes, he has spoken more broadly on subjects such as tariffs.

Speaking at the U.S. Monetary Policy Forum earlier this month, Powell noted that the “net effect” of the White House’s positions on fiscal, immigration, regulatory, and trade policy could guide future interest rate decisions.

“It is the net effect of these policy changes that will matter for the economy and for the path of monetary policy,” Powell said in prepared remarks. “While there have been recent developments in some of these areas—especially trade policy—uncertainty around the changes and their likely effects remains high as we parse the incoming information. We are focused on separating the signal from the noise.”

Powell reiterated that the Fed could afford to be patient because the economy and monetary policy are in a good place.

Could the Fed swiftly pivot its policy stance in a rapidly changing economic climate? One survey might indicate where the institution thinks the economy is heading.

Summary of Economic Projections

Updates to the Summary of Economic Projections (SEP), a quarterly survey of officials’ estimates of future monetary policy and broader economic conditions, will be published.

In the December report, the Fed revised its inflation forecasts higher, and changes in real GDP growth and the unemployment rate were minor.

Economic forecasts have changed significantly since the beginning of the year, with economists discussing higher odds for a recession or stagflation—an environment of elevated inflation, anemic growth, and rising unemployment.

Wall Street has panicked over both possible scenarios, especially after the Atlanta Fed’s GDPNow Model suggested a sharp first-quarter contraction. The regional central bank has since clarified that gold imports fueled the steep decline in its January-March GDP outlook.

Still, traders’ concerns were not quashed when Trump declined to rule out a recession or when Treasury Secretary Scott Bessent told NBC’s “Meet the Press” on March 16 that there were “no guarantees” that the United States would avert a recession.

“The klaxon of layoff headlines, a falling stock market, and tariff fears” have worsened consumer confidence, which could present consequences to the broader economy, said Bill Adams, the chief economist for Comerica Bank.

“The pullback in confidence is becoming a real threat to consumer spending, which as is often repeated accounts for two-thirds of U.S. economic activity,” Adams said in an emailed note to The Epoch Times.

“Downside risks to the economic outlook have increased substantially over the last month.”

Matthew Luzzetti, chief U.S. economist at Deutsche Bank, said that for now, SEP data will maintain the median expectation of two rate cuts in 2025.

“However, we expect some upward drift in individual dots with risks the median shows only one reduction in 2025,” Luzzetti said in a note. “Motivating this slightly hawkish signal will be economic projections that show higher inflation, somewhat weaker growth, and an unchanged forecast for the unemployment rate this year. Finally, we expect the long-run dot to continue drifting slowly higher.”

The Fed’s dot plot is a visual aid to communicate the central bank’s interest rate projections. Each dot on the chart highlights an individual’s forecast for interest rates at the end of a specific year.

Nevertheless, the Federal Reserve will unlikely “ride to the rescue” if economic activity takes a hit while inflation expectations soar, Comerica’s chief economist added.