Economy US Federal Reserve leaves interest rates unchanged
The Fed has once again left its key interest rate unchanged. It therefore remains in the range of 4.25 to 4.5 percent, as the Federal Reserve Board announced on Wednesday. The key interest rate has been at this level since December.
19.03.2025, 19:02
19.03.2025, 19:23
SDA
The Federal Reserve had already left the key interest rate untouched in January. The current decision was also made against the backdrop of US President Donald Trump's aggressive tariff policy, which could push inflation up again.
Meanwhile, the central bank remains cautious about cutting interest rates this year - and is revising its growth forecast downwards.
Fear of recession
In the USA, there are concerns that the US economy could slide into recession due to Trump's tariff policy. One consequence of import tariffs is that goods imported from abroad cannot be produced in the US immediately. They would therefore automatically become more expensive.
In addition, US companies could also increase their prices in view of the reduced competition from abroad. Tariffs were recently imposed on Canada, Mexico and China as well as on steel and aluminum imports. Trump has at least partially withdrawn the tariffs on goods from Canada and Mexico.
Recent statements by Trump are being interpreted to mean that the President is no longer ruling out a recession. Typical characteristics of an economic downturn are rising unemployment, falling consumption, declining investment and general economic uncertainty.
The Federal Reserve has now also published its new economic forecast for the USA - and is more pessimistic than it was three months ago. According to the forecast, the gross domestic product (GDP) of the world's largest economy will grow by 1.7% this year (December: 2.1%).
Fed assumes slightly higher inflation
The central bankers are sticking to their interest rate forecast. The Fed's decision-makers expect an average key interest rate of 3.9% for 2025, as in December. This indicates two small interest rate hikes this year.
Since taking office, Trump has imposed high tariffs on goods from various countries. Uncertainty about the possible consequences of this aggressive approach is one of the strongest price drivers and could slow down growth. The Fed's task is to keep inflation in check. It is aiming for an inflation rate of 2 percent.
For this year, the central bankers are now expecting an average inflation rate of 2.7 percent - slightly higher than previously assumed. In December, the forecast was 2.5 percent. Core inflation, i.e. excluding food and energy prices, is expected to be 2.8 percent this year (December: 2.5 percent).
The central bankers pay particular attention to this figure in their analysis. According to experts, it reflects the general price trend better than the overall rate, as components that are prone to fluctuation are factored out.
