Bloomberg: market expects Fed to leave rates unchanged as Trump's new administration creates greater uncertainty

On 19 March, according to Bloomberg, every one of the 108 forecasters surveyed by Bloomberg predicted that the Federal Reserve's FOMC will leave policy unchanged, with a target range capped at 4.5%. This will be the second consecutive time the Fed has kept policy unchanged, after Fed Chairman Jerome Powell and his colleagues implemented three rate cuts totalling 1 percentage point at the end of last year. The Fed, and the economy as a whole, faces an unusually uncertain outlook for economic growth and inflation in the months and quarters ahead.

On the inflation front, tariff hikes have raised concerns about consumer prices rising again - the Fed is not yet done getting prices back to its 2% target. The latest reading for the core personal consumption expenditures index (excluding food and energy) was 2.6%. The Fed had previously forecast year-end inflation at 2.5 per cent. As for the Fed's new policy rate outlook, the question is whether the median forecast of officials is in line with December's projection of two rate cuts in 2025. There will be considerable dispersion in the trajectory of rate cuts because of uncertainty,’ said Diane Swonk, chief economist at KPMG.