What the March FOMC meeting statement said
The (FOMC), the rate-setting body that meets roughly eight times per year, left the Federal Funds rate unchanged at a range of 4.25% to 4.5% at its meeting on Wednesday. In April, the Fed will slow its unwinding of Treasury securities, but it will leave the pace unchanged for agency debt and agency mortgage-backed securities.
The economy holds steady
Since the January Fed meeting and “no cut” decision, we’ve seen continuing resilience in the labor market despite a slightly higher unemployment reading in February. While inflation rose in January in both overall and core measures, we saw a reversal of this trend in February. While some indicators—consumer confidence and retail sales—suggest concerns from consumers that could weigh on economic growth moving forward, most data suggest that the economy remains largely on track even if the risks have risen.
Despite a steady Fed, longer rates have varied with the economic outlook
The Fed’s policy rate remains a whole percentage point lower since its big, initial cut in September. Yet in that time, economic and policy changes have caused views about what’s ahead for the economy to fluctuate widely, and interest rates reflect this uncertainty. The 10-year yield has ranged from roughly 3.8% to 4.8% while mortgage rates have traversed a nearly similar span from 6.1% to 7%. Fortunately, both the 10-year and the mortgage rate seem to have settled at the middle of this range, a welcome break for home shoppers as the Best Time To Sell approaches next month.
Monetary policy outlook steady despite a slight downgrade in economic outlook
In this March meeting, the Fed has updated its summary of economic projections, which show very modest changes in the Fed’s outlook. At its December meeting, the Fed’s projections suggested that members anticipated that an additional 50 basis points of easing would likely be appropriate this year and next, and these projections were despite modest upticks in near-term inflation and unemployment expectations and a slight downgrade in expected economic growth in 2025 through 2027.