03:06 PM EDT, 03/19/2025 (MT Newswires) -- (Updates with the Summary of Economic Projections and comments from TD.)

The Federal Reserve on Wednesday held its benchmark lending rate steady for a second straight meeting, while keeping its policy outlook intact and downgrading economic projections through 2027.

The Federal Open Market Committee left interest rates in the range of 4.25% to 4.50%, in line with Wall Street's expectations. Policymakers reduced rates by 50 basis points in September and by 25 basis points each in November and December.

"Uncertainty around the economic outlook has increased," the FOMC said Wednesday following its two-day meeting. Policymakers reiterated their recent remarks that inflation remained "somewhat elevated" and that economic activity has continued to expand at a solid rate.

The FOMC's Summary of Economic Projections showed Wednesday that members continue to see the median federal funds rate at 3.9% this year, unchanged from their December guidance and indicating potential easing in 2025. They maintained their rate outlooks for 2026 and 2027 at 3.4% and 3.1%, respectively.

The document showed 2025 real gross domestic product growth of 1.7%, down from a 2.1% pace projected in December. The 2026 growth outlook was lowered to 1.8% from 2%, while the 2027 estimate was trimmed to 1.8% from 1.9%.

"Markets are expecting the Fed to remain on hold until the summer," TD Economics said in a report published Wednesday. "Given the strong jump-off point for the economy, this makes sense as it will take time for the impact of President (Donald) Trump's policies to show up in the economic data."

Policymakers raised their projections for inflation, as measured by personal consumption expenditures, to 2.7% from 2.5% for 2025 and to 2.2% from 2.1% for next year. They now see 2025 core PCE inflation, which excludes the volatile food and energy components, at 2.8%, up from the previously estimated 2.5% rise.

Official data released earlier this month showed that US consumer inflation decelerated more than expected in February, while producer prices were flat, marking a slowdown sequentially. The Trump administration has recently proposed or implemented tariffs on its key trading partners, including China, Canada and the European Union, which have all announced retaliatory tariffs.

"In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the committee will carefully assess incoming data, the evolving outlook, and the balance of risks," the FOMC said Wednesday, reiterating comments made in January.

The unemployment rate is now seen at 4.4% this year, up from December's 4.3% view, according to the latest SEP. The FOMC kept unemployment expectations intact for 2026 and 2027.

Starting next month, the FOMC will lower the monthly redemption cap on Treasury securities to $5 billion from $25 billion. It will maintain the monthly cap on agency debt and agency mortgage-backed securities at $35 billion, the FOMC said.

The next policy meeting is scheduled for May 6-7.

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