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The Federal Reserve will keep interest rates where they are for the time being (The Wall Street Journal, subscription). 

What’s going on: On Wednesday “[t]he central bank held steady its benchmark federal-funds rate at around 4.3% at its policy meeting as it assesses how policy changes by the Trump administration could reshape the economic outlook. … ‘We think it’s a good time for us to await further clarity,’ Fed Chair Jerome Powell said.”

• Officials said they anticipate inflation rising in 2025 to 2.7% from 2.5%, the January reading, and expect price growth to slow in 2026 and 2027.
• New economic projections show that 11 of 19 policymakers expect the bank to cut interest rates at least twice in 2025.
• Fed officials also said they anticipate gross domestic product growth to come in this year at 1.7%, down from their December projection of 2.1%.

Why they did it: “Officials wanted to prevent the aggressive rate increases they made in 2022–23 from unnecessarily slowing down economic activity as price and wage growth cooled, and they cut rates by 1 percentage point between September and December last year. But they also don’t want to undo recent progress on inflation.”

Related news: Following the Fed’s decision, Ways and Means Committee Chairman Jason Smith (R-MO) issued a statement sounding the alarm on the need to extend the 2017 Trump tax cuts, citing a recent NAM tax study.