Global financial markets are containing breathing when the United States Federal Reserve concludes its two -day policy meeting today. Investors anxiously expect new projections and signals on the trajectory of interest rates in the context of renewed commercial tensions and persistent inflationary risks.
It is widely expected that the central bank maintain its reference interest rate without changes in its current range of 4.25–4.50 percent. But, the real drama lies in the details, particularly the “updated points” and the summary of the economic projections (SEP). It will offer clues about the economic perspective in evolution of the policy formulators and the rate in an increasingly uncertain macroeconomic environment.
In the heart of this uncertainty is the last round of tariff policies of President Donald Trump, a cornerstone of his economic agenda that has begun to reverberate in the financial markets and joint rooms. As commercial barriers increase, economists are already trimming growth expectations and reviewing the spectrum of stagflation, a dreaded mix of warm economic expansion and persistent inflation.
Cautious optimism, growing anxiety
“The markets have exhibited cautious but optimistic behavior in the last 24 hours as the two -day policy meeting of the Federal Reserve takes place,” said Anish Jain, founder of W Chain. “The launch of the updated dot plot of the Central Bank and the accompanying comment will be critical. Any sign of a softer posture could reinforce the appetite of the risk, while a more aggressive tone can strengthen the US dollar and weigh on the capital markets.”
Investors will closely analyze the launch of SEP at 2:00 pm of ET and the press conference of the president of the Fed Jerome Powell 30 minutes later, looking for clues on whether the Central Bank intends to maintain its projection of two target cuts, a first prognosis described in December when the officials reviewed their perspective of four cuts.
But since then, the economic panorama has changed. Trump’s growing tariff agenda, including levies on the key imports of China, the European Union and Mexico, is beginning to filter into cost structures in all industries, which leads Wall Street to reassess the inflation trajectories.
Goldman Sachs check the forecasts
Goldman Sachs Economists now project that the Fed will raise its inflation perspective 2025 to 2.8% from the previous 2.5%, which reflects the effects of commercial restrictions and interruptions of the supply chain. At the same time, the Investment Bank expects the Central Bank to cut its Growth projection 2025 to 1.7% of 2.4%, citing weaker exports, the increase in supplies costs and diminishing business investment.
Economists believe that Trump tariffs function as a tax side tax. While they can be politically motivated, their macroeconomic impact will be tangible: more strict corporate margins, stickiness of the consumer price and a buffer effect on global commercial volumes.
The risk is that these policies, if they expand even more in April as Trump pointed out, could push the Fed to a corner, which forces him to choose between counteracting inflationary pressures and supporting a deceleration economy.
Mounting
The possibility of a stagflation scenario is gaining traction among global investors. According to the latest Bank of America Global Fund Administrator SurveyLaunched on Tuesday, more than 70% of respondents now expect a stagflation, the highest level since November 2023.
This concern is reflected in the latest consumer data. The University of Michigan consumption feelings index He fell in March 57.9 from 64.7 in February, underlining the growing public anxiety on pressures of persistent prices and uncertain economic perspectives. Food, housing and gasoline remain the main concerns for homes, even when salary growth shows signs of plateau.
Point plot in focus
Analysts say that the most revealing element of today’s launch can be the plot of updated points, the quarterly graph that illustrates where each Fed policy formulator believes that interest rates should be in the coming years. In December, most officials screened two cuts in 2025, reflecting the expectations that inflation would be normalized and that the economy gradually decelerated.
If these points change up, which indicate less cuts or delay, it will depend largely on how seriously the Fed sees the inflationary effects of Trump’s policies. If policy formulators believe that current economic turbulence is transitory, they can remain firm. If not, a more aggressive recalibration could arise.
The Fed is trying to navigate a moving goal. On the one hand, inflation remains above its 2% target (currently in 2.8% in February 2025). On the other hand, the economy is beginning to lose impulse, particularly in manufacturing and real estate.
A political tone
While the Fed operates independently, political developments are large about their decision -making calculation.
Market participants are increasingly cautious that political uncertainty could delay very necessary investment or make companies exceed hiring. Already, the activity of the United States factory last month Edges closer to stagnation As orders and employment were contracted, according to the PMI index of the Institute for Supply Management.
What follows?
Despite the warning tone in recent data, most economists still expect at least one rate cut this year, probably in the second half, provided that inflation continues with the lowest trend and growth does not fall from a cliff.
Rate cuts are approaching: it’s just a matter of when, not yes. But the sequence is now much more complicated. Trump’s economic agenda can delay the Fed timeline, especially if tariffs become inflationary faster than expected.
Some investors bet on Fed could try to achieve a delicate balance, maintaining their projection of two cuts while adding a language that suggests flexibility depending on evolving conditions.
Since Powell is expected to reinforce the data dependent approach of the Central Bank during its press conference, market volatility could increase in the hours after launch, especially if the messaging is ambiguous or contradicts a previous guide.
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