Economy

The Federal Reserve is expected to keep its key rate steady on Wednesday, after a series of cuts that lowered rates by a full percentage point last year.That means consumers looking to borrow are likely to have to wait a bit longer for better deals on many loans, but savers will benefit from steadier yields on savings accounts.Economists don’t expect another rate cut for a while, as the central bank waits for more clarity on an increasingly uncertain outlook given President Trump’s policies on tariffs, immigration, widespread federal job cuts, among other things.The Fed’s benchmark rate is set at a range of 4.25 to 4.5 percent. In an effort to tamp down sky-high inflation, the central bank began lifting rates rapidly — from near zero to above 5 percent — between March 2022 and July 2023. Prices have cooled considerably since then, and the Fed pivoted to rate cuts, lowering rates in September, November and December.More recently,Mr. Trump’s inflation-stoking polices could prompt the Fed to delay more rate cuts. But at the same time, longer-term interest rates set by the markets have been drifting down, influencing a wide range of consumer and business borrowing costs.Here’s what to watch for in five areas of your financial life:Auto RatesCredit CardsMortgagesSavings Accounts and C.D.sStudent LoansWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Federal Reserve officials are scheduled to release their first set of economic projections this year, alongside their interest rate decision, on Wednesday. Those forecasts will offer a fresh glimpse of the trajectory for monetary policy at a highly uncertain moment for the central bank.Policymakers paused interest rate cuts in January after reducing borrowing costs by a percentage point in the latter half of last year. They are expected to again stand pat on Wednesday as they await greater clarity on how far President Trump will push his global trade war and to what extent he will follow through on other central aspects of his agenda, including slashing government spending and deporting migrants.The big question now is when — and to some extent whether — the Fed will be able to restart cuts this year.When the Fed last released quarterly economic projections in December, officials penciled in two rate cuts that would reduce borrowing costs by half a percentage point in 2025. But economists now expect Mr. Trump’s policies to lead to more intense price pressures and slower growth, a tough dynamic for the central bank and one that could prompt policymakers to scale back how many cuts they project going forward.Here’s what could change and how to interpret those updates.The dot plot, decodedWhen the central bank releases its Summary of Economic Projections each quarter, Fed watchers focus on one part in particular: the dot plot.The dot plot will show Fed policymakers’ estimates for interest rates through 2027 and over the longer run. The forecasts are represented by dots arranged along a vertical scale — one dot for each of the central bank’s 19 officials.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

President Trump has never been shy about criticizing the Federal Reserve, frequently seeking to pressure the nation’s central bank into reducing interest rates more swiftly.“Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!!!,” Mr. Trump posted on Truth Social last month, adding: “Lets Rock and Roll, America!!!”But the Fed is expected to see things differently on Wednesday — choosing to hold rates steady in the face of rising prices and slowing growth — in a move that seems destined to stoke Mr. Trump’s anger.At the heart of the tension are Mr. Trump’s tariffs, which he has promised to apply more expansively beginning April 2. The White House contends its protectionist policies can rejuvenate American manufacturing and reduce the country’s reliance on imports, but economists believe that Mr. Trump risks touching off a protracted global trade war that will badly harm the U.S. economy.The latest dour projection arrived Tuesday, when Fitch Ratings cut its U.S. growth forecast for this year to 1.7 percent from 2.1 percent. It explicitly pointed to Mr. Trump’s tariffs — and the “huge uncertainty” around them — as two of the drivers behind a potential economic slowdown and short-term rise in prices.The uncertainty is likely to freeze any rate cutting at the Fed, perhaps straining an already tortured relationship between Mr. Trump and Jerome H. Powell, the man he handpicked to serve as chair of the central bank in 2017.In his first term, the president described Mr. Powell as the “enemy,” and blasted his colleagues as “boneheads,” in a bid to browbeat the Fed into slashing interest rates. Mr. Trump at one point even considered firing Mr. Powell, raising fears that the White House might try to undermine the Fed’s political independence.Soon after returning to the White House, the president revived his attacks: He said, again, that he would “demand that interest rates drop immediately,” and one of his leading advisers — the tech billionaire Elon Musk — signaled support for an audit of the central bank. When the Fed chose to hold rates steady at its last meeting, Mr. Trump charged anew that Mr. Powell and the Fed had “failed to stop the problem they created with inflation.”“If the Fed had spent less time on DEI, gender ideology, ‘green’ energy, and fake climate change, Inflation would never have been a problem,” Mr. Trump wrote in a post on Truth Social. More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldBritain is racing to avoid the worst of US President Donald Trump’s global tariffs, due on April 2, after “productive” talks on Tuesday that included discussions about the UK’s digital services tax.UK business secretary Jonathan Reynolds has told his officials to carry on talking with Trump’s trade team over the next 48 hours in the hope of securing a deal that would spare the UK the highest level of US reciprocal tariffs.The discussions include the UK’s levy on companies such as Alphabet and Facebook, a key complaint of US negotiators, according to British officials, despite the UK Treasury insisting it has no plans to drop the £800mn-a-year tax.Allies of UK chancellor Rachel Reeves admit that a global trade war could “blow all our plans off course”.Trump has vowed to impose “reciprocal” tariffs on the US’s trading partners on April 2. But he is targeting not only countries that impose tariffs on the US but also those that use other policies the US president dislikes, such as internal sales taxes.British officials briefed on the talks said they accepted that the UK would inevitably be hit with Trump’s promised tariffs next month but that Reynolds’ aim was to see them applied at a reduced rate.“We are working at rapid speed,” said one UK official. “There will be some friends of the US who will be in the tent and others who will be outside. Our aim is to be in the tent.”British officials said there were “potential heads of agreement” on a broad trade deal between the UK and US, focused on technology, which could alleviate punitive tariffs on Britain, but they conceded the American negotiation position was “demanding”.A key US demand is that Britain drops its digital services tax, a levy introduced in 2020 which falls heavily on American tech companies, but which is forecast to raise £800mn for a cash-strapped Treasury in 2024-25. Other countries in Europe have similar taxes, as has Canada.Reynolds discussed the demands during a two-hour meeting in Washington on Tuesday with US commerce secretary Howard Lutnick, US trade representative Jamieson Greer and US special envoy Mark Burnett.Officials called Reynolds’ talks “productive” and focused on the fact that Britain and the US have a broadly balanced trade relationship.The UK Treasury said it was not planning to change the digital services tax, a 2 per cent levy on the revenues of search engines, social media platforms and online marketplaces which derive value from UK users. But British officials said it was under discussion.US Treasury secretary Scott Bessent told Fox Business Network’s Mornings with Maria this week that the Trump administration would apply different tariffs to different trading partners. “On April 2, each country will receive a number that we believe represents their tariffs,” Bessent said. “For some countries it could be quite low, for some countries it could be quite high.”Trump is especially targeting the EU and any special deal for the UK could lead to trade tensions between London and Brussels.Lord Peter Mandelson, a strong pro-European, has said that Brexit does offer Britain a chance to have a better relationship with the US than its European neighbours.UK Prime Minister Sir Keir Starmer and Trump agreed last month that their teams should start working together on an “economic prosperity deal”.The UK Department of Business and Trade said: “The UK looks forward to developing this deal over the coming weeks and months.” More

Bank of America CEO Brian Moynihan said Wednesday that consumers are continuing to spend and economic growth should be solid though slower this year.
From a numbers standpoint, that means gross domestic product growth this year of closer to 2% from recent trends closer to 3%, according to the CEO.
“We see the consumer continue to be solid, and that should bode well for the economy,” he added.

Bank of America CEO Brian Moynihan said Wednesday that consumers are continuing to spend and economic growth should be solid though slower this year.
Despite surveys indicating that confidence is at a nearly three-year low amid increasing worries about inflation, Moynihan told CNBC that spending data shows consumers are still shelling out money, though shifting away from goods and into services.

“We’re in this classic moment … where the consumer is saying, ‘I’m getting more pessimistic,’ in some of the surveys and things like that,” he said during a “Squawk Box” interview. “But if you actually look what they’re doing day to day, they continue to spend, which means the economy ought to be holding up better than people think.”
From a numbers standpoint, that means gross domestic product growth this year of closer to 2% from recent trends closer to 3%, according to the banking chief. Some of the slowdown will come from President Donald Trump’s tariffs, which Moynihan estimated will cut about 0.4 percentage point off growth in the near term before the economy adjusts.
However, he called the 2% level “trend growth. That’s what we’ve all been trying to get to for 10 or 15 years after the financial crisis.”
“We see the consumer continue to be solid, and that should bode well for the economy,” Moynihan added. “There’s a lot of questions out there, and I think that will sort through. But right now, we’re not talking about what could happen, we’re talking about is happening. The consumer continues to spend pretty strongly for the first part of this year.”

Fed outlook

The interview came the same day that the Federal Reserve will issue its latest decision on interest rates. Markets give almost no chance to a reduction at the meeting, and Moynihan backed up the bank’s call that not only will the central bank not move Wednesday, but it also will be on hold through 2026.

“I would think, though that the Fed would be a little cautious about cutting, not knowing what the impact of tariffs is going to be,” he said. “It would seem that maybe they’d want to hold on to the firepower that they’ve built up over the last year or so… They shouldn’t be premature to try to boost the economy when it’s growing at 2%.”
Moynihan added that it would be better to keep interest rates had a “real interest rate” that was closer to 3% than the near-zero that was prevalent from the financial crisis into the Covid pandemic. More

This article is an on-site version of our FirstFT newsletter. Subscribers can sign up to our Asia, Europe/Africa or Americas edition to get the newsletter delivered every weekday morning. Explore all of our newsletters hereGood morning and welcome back to your daily briefing covering finance, business and international politics. Here’s what we’re covering today: Investors shelter in haven assets Nvidia unveils new AI chipToday’s big read on Goldman’s succession plans And Martin Wolf on a “Mar-a-Lago accord”Investors have poured $22bn into short-term US government debt this year after concerns over Donald Trump’s economic and trade policies set off a race for haven assets and sent stocks tumbling.Net inflows into short-dated Treasury funds hit about $21.7bn between early January and March 14, according to EPFR data, setting the stage for the biggest quarterly flood into the vehicles in two years. Flows into long-term government bond funds were also positive for the quarter to date, but totalled a much smaller $2.6bn.The cascade of money into shorter-dated government debt comes as investors have sought shelter from a sell-off in riskier assets, such as stocks and junk-rated corporate bonds, amid deepening worries that Trump’s aggressive trade agenda will slow growth in the world’s biggest economy and stoke higher inflation.The release of the EPFR data follows a Bank of America survey this week which showed investors made their “biggest-ever” cut to US equity allocations this month, while junk bond spreads — the gap in borrowing costs between lowly-rated companies and the US government — have climbed sharply.The bet on short-term US debt will be tested later today, when the Fed issues its latest economic and interest rate projections. Markets are expecting two to three cuts in the central bank’s policy rate this year, and any deviations from that outlook are likely to ripple through fixed income markets.Bob Michele, head of global fixed income at JPMorgan Asset Management, said the US bond market “can be the anchor in the storm”. With “pure de-risking” and “[if] you think the equity market’s going to go through a correction, money just tends to go to cash and cash-like instruments”, he added.Stock vigilantes: It is time to give up on the idea that Trump will change his policies if stock markets tumble, writes Katie Martin.And here’s what else we’re keeping tabs on today:Brazilian interest rates: Brazil’s central bank also concludes its latest monetary policy meeting. The country’s Selic benchmark rate is expected to rise by 100 basis points to 14.25 per cent. The Bank of Japan earlier held rates steady.Economic data: Argentina reports its fourth-quarter and 2024 GDP numbers along with its trade balance figures for February.Results: General Mills is expected to report a decline in third-quarter revenue because of the impact of falling demand for snacks and cereals. Williams-Sonoma reports fourth-quarter revenue.Ukraine: Volodymyr Zelenskyy said he would speak to Donald Trump later, as Russia continues to strike targets in Ukraine despite Vladimir Putin agreeing to pause attacks on energy infrastructure in a call with the US president. Olympics: The International Olympic Committee gathers in Greece for a three-day meeting to pick a new chair.Five more top stories1. Nvidia has named its next generation of artificial intelligence microchips after the American astronomer who discovered dark matter. The Vera Rubin AI semiconductor will be used to train larger AI models as the appetite for ever-faster chips and software continues to grow, chief executive Jensen Huang told the group’s annual conference in San Jose, California yesterday. Huang also made a prediction about the growth of robots.More technology news: X’s valuation has soared back to $44bn, the amount Elon Musk paid in 2022 to buy the social media site then called Twitter. Starlink: US commerce secretary Howard Lutnick touted Musk’s satellite internet network for a $42bn rural broadband programme, raising new conflict of interest questions.2. Turkish police have detained Istanbul’s mayor Ekrem İmamoğlu, the main political challenger to President Recep Tayyip Erdoğan, as the government’s sweeping crackdown on the opposition intensified. The Republican People’s party was set to name İmamoğlu, one of the country’s most popular political figures, as its presidential candidate in a primary on Sunday.3. China is delaying approval for carmaker BYD to build a plant in Mexico, after plans were first announced in 2023. People familiar with the matter said Beijing was worried that the smart car technology developed by China’s biggest electric-vehicle maker could leak across the border to the US. 4. The US chief justice has issued a rare public rebuke after Donald Trump threatened to impeach a federal judge who tried to block deportations of alleged Venezuelan gang members. John Roberts said the president’s remarks were “not an appropriate response” to disagreements over judicial rulings.5. Citigroup has cut bonuses for 250 top employees under a programme that tied their pay to a turnaround effort aimed at boosting shareholder returns and fixing compliance shortcomings at the US bank. The so-called transformation bonus programme was put in place three years ago after a high-profile blunder in which Citi accidentally wired $900mn to a group of hedge funds.Today’s Big ReadGoldman chief executive David Solomon and his lieutenant John Waldron More

Chinese experts say Beijing is open to talks but is being stonewalled by the State Department and other official channels.President Trump fueled new speculation this week about a meeting with China’s top leader, Xi Jinping, when he told reporters that Washington needed to be cleaned up to prepare for a summit between the two leaders in the “not too distant future.”Mr. Trump provided no details, and China has said nothing publicly about any such meeting. The stakes of a visit would be high: President Trump has imposed 20 percent tariffs on China’s shipments to the United States, and may order another round next month. China wants to try to head off further escalations in the trade war that would set back its efforts to revive the country’s beleaguered economy, experts say.But before any summit can take place, China still needs answers to two pressing questions: What does Mr. Trump want? Who can Beijing talk to in Washington who Mr. Trump might listen to?To try to answer these questions, China sent scholars to the United States to take part in unofficial diplomatic talks last month with Trump administration officials and American foreign policy experts. China has grown concerned that the officials Beijing have been dealing with at the State Department and the National Security Council, who are outside Mr. Trump’s inner circle, are not conveying their messages to him, some of the scholars said.“We talk through the diplomatic channel. That’s the normal channel. But can that reach President Trump? Do those people we talked to really know what President Trump is thinking?” said Da Wei, the director of the Center for International Security and Strategy at Tsinghua University in Beijing, who was among the scholars.China has also been publicly signaling its interest in talks. The Chinese commerce minister said earlier this month that he wrote a letter to the U.S. commerce secretary and U.S. trade representative inviting them to meet. And Chinese officials describing Beijing’s efforts to curtail the production of fentanyl last week urged the United States to return to dialogue.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The Bank of Japan held interest rates on Wednesday as the rising risk of a global trade war and potential downturn in the US weighed on Japan’s hope for a sustained economic revival.The unanimous decision, which came at the conclusion of a two-day meeting of the Japanese central bank’s policy board, left the short-term policy rate at about 0.5 per cent.The result was widely forecast by economists and had been priced in by markets, according to traders.In a statement accompanying the decision, the BoJ warned that “high uncertainties” remained around Japan’s economic activity and prices. The central bank made particular reference to the “evolving situation regarding trade and other policies in each jurisdiction”.In a press conference on Wednesday afternoon, BoJ governor Kazuo Ueda warned that uncertainty from abroad had sharply heightened since January, when the central bank last raised rates, and that it was difficult to quantify the risk.“Over the past month or so, there have been rapid changes in the extent and the speed of US tariffs,” said Ueda. “However, there are elements that we may not know until April, so the level of uncertainty will remain high.”He added that the BoJ would monitor changes in US trade policy.Japanese policymakers’ concerns centre not just on whether its own exports will be subject to US President Donald Trump’s tariffs, but also on the impact of multiple trade wars on the Japanese economy, which depends heavily on global growth.Trade minister Yoji Muto’s efforts to secure tariff exemptions from his US counterpart Howard Lutnick this month did not produce the hoped-for guarantees. Attention has now turned to whether Japanese cars will be subject to levies that Washington has said could be imposed as soon as April.The BoJ statement also noted the domestic dilemma of “normalising” interest rates at the same time that the country’s economy is emerging from decades of stagnant or falling prices. A majority of economists expect the BoJ to increase rates at least once more in 2025, though some see the likelihood as fading.The central bank noted that Japanese households were benefiting from wage increases, but also suffering from record-high rice prices. The BoJ warned that prices were likely to remain high throughout fiscal 2025. Ueda said that while food prices were being driven higher by weather, among other factors, higher prices affected sentiment and could raise household inflation expectations.He noted that underlying inflation, which the BoJ measures using its own calculations, remained below the bank’s target of 2 per cent.Japan is entering the final days of this year’s shunto wage negotiation season, which has delivered a solid round of pay increases for full-time and part-time workers.At the company level, Japanese groups including Hitachi, Fujitsu and Toshiba have handed workers the biggest pay rises in more than 25 years.On Friday, Rengo, the country’s largest labour union representing more than 1.5mn workers, said its negotiations had resulted in average wage gains of 5.46 per cent, which it said was the largest pay bump in 33 years.That was up from the 5.28 per cent increase secured in 2024, which was then the highest in more than a quarter of a century.Ueda said the 2025 wage negotiations had shown gains broadening to include smaller companies.But Stefan Angrick, Japan economist at Moody’s Analytics, warned that the shunto result was undercut by recent inflation. Headline consumer price inflation, he noted, jumped to 4 per cent year on year in January, meaning the newly won pay gains would not stretch as far as hoped.“Even if next year’s shunto negotiations deliver a similarly strong result, it would take two more years for real wages to return to pre-pandemic levels,” said Angrick. More