The FOMC left the fed funds target rate unchanged a 4.25-4.50 percent. The statement was largely unchanged from the prior one except to note that uncertainty around the economic outlook has increased after the previous assessment that the risks to the outlook were roughly in balance. The statement repeated, The Committee is attentive to the risks on both sides of its dual mandate.

While interest rate policy was unchanged, the FOMC announced a change to its program to reduce its reserves of US treasuries and agency mortgage-backed securities. The statement said, Beginning in April, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25 billion to $5 billion. The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion.

The vote to maintain the fed funds rate at its present level is unanimous. However, Governor Christopher Waller dissented on the change in the cap on reinvestments. He preferred to continue the current pace of decline in securities holdings.

The summary of economic projections (SEP) shows a substantial downward revision for GDP growth in 2025 to up 1.7 percent in the March forecast compared to up 2.1 percent in the December forecast. The unemployment rate is forecast up a tenth to 4.4 percent compared to 4.3 percent in the prior projections. The PCE deflator is now expected to rise 2.7 percent in 2025, and upward revision from the previous up 2.5 percent and the core PCE deflator is expected to rise 2.8 percent in 2025 after the previous forecast of up 2.5 percent.

From the current midpoint of the fed funds rate, the projected appropriate path of monetary policy now looks for roughly two rate cuts of 25 basis points each to reach 3.9 percent at the end of 2025.

The Fed is expected to wait for the dust to settle on the impact of tariffs and other policy changes, so no change in rates this time, even as expectations grow for a rate cut in June.

The FOMC meeting announcement is a policy statement issued at the conclusion of each meeting of the Federal Open Market Committee. It offers updates on economic conditions with special focus on the health of the labor market and the latest on inflation. It also updates the status of the federal funds target which is the FOMC's official policy interest rate. This rate is expressed within a range, such as 1.75 to 2.00 percent. The center of this range is the implied target. The higher this target, the more restrictive monetary policy becomes, the lower this target, the more accommodative policy becomes. Other policy tools are also discussed in the meeting announcement including updates on direct purchases of Treasuries and mortgage-backed securities. Debate is not offered in the statement, just the consensus view is expressed, though the statement does list the total committee vote and how each member voted.

The Fed determines interest rate policy at FOMC meetings. These occur roughly every six weeks and are the single most influential event for the markets. For weeks in advance, market participants speculate about the possibility of an interest rate change at these meetings. If the outcome is different from expectations, the impact on the markets can be dramatic and far-reaching.

The interest rate set by the Fed, the federal funds rate, serves as a benchmark for all other rates. A change in the fed funds rate, the lending rate banks charge each other for the use of overnight funds, translates directly through to all other interest rates from Treasury bonds to mortgage loans. It also changes the dynamics of competition for investor dollars. When bonds yield 5 percent, they will attract more money away from stocks than when they only yield 3 percent.

The level of interest rates affects the economy. Higher interest rates tend to slow economic activity; lower interest rates stimulate economic activity. Either way, interest rates influence the sales environment. In the consumer sector, fewer homes or cars will be purchased when interest rates rise. Furthermore, interest rate costs are a significant factor for many businesses, particularly for companies with high debt loads or who have to finance high inventory levels. This interest cost has a direct impact on corporate profits. The bottom line is that higher interest rates are bearish for the stock market, while lower interest rates are bullish.

The Fed also began quantitative easing during the past recession and, through direct purchases in the market, steadily increased its holdings of Treasuries and mortgage-back securities before pulling back from the program beginning in late 2017. Along with lowering its bond holdings, the Fed began to gradually raise its federal funds target until mid-2019 when, facing slowing global growth, it began to lower its target.

Frequency
Eight times a year.