Finance

The rate-setting Federal Open Market Committee kept its key borrowing rate targeted in a range between 4.25%-4.5%, where it has been since December.
The FOMC downgraded its collective outlook for economic growth and gave a bump higher to its inflation projection.
Officials now see the economy accelerating at just a 1.7% pace this year, down 0.4 percentage point from the last projection in December.
In addition to the rate decision, the Fed announced a further scaling back of its “quantitative tightening” program in which it is slowly reducing the bonds it holds on its balance sheet.

WASHINGTON – The Federal Reserve in a closely watched decision Wednesday held the line on benchmark interest rates though still indicated that reductions are likely later in the year.
Faced with pressing concerns over the impact tariffs will have on a slowing economy, the rate-setting Federal Open Market Committee kept its key borrowing rate targeted in a range between 4.25%-4.5%, where it has been since December. Markets had been pricing in virtually zero chance of a move at this week’s two-day policy meeting.

Along with the decision, officials updated their rate and economic projections for this year and through 2027 and altered the pace at which they are reducing bond holdings.

Despite the uncertain impact of President Donald Trump’s tariffs as well as an ambitious fiscal policy of tax breaks and deregulation, officials said they still see another half percentage point of rate cuts through 2025. The Fed prefers to move in quarter percentage point increments, so that would mean two reductions this year.
Investors took encouragement that further cuts could be ahead, with the Dow Jones Industrial Average rising more than 400 points following the decision. However, in a news conference, Federal Reserve Chair Jerome Powell said the central bank would be comfortable keeping interest rates elevated if conditions warranted it.
“If the economy remains strong, and inflation does not continue to move sustainably toward 2%, we can maintain policy restraint for longer,” he said. “If the labor market were to weaken unexpectedly, or inflation were to fall more quickly than anticipated, we can ease policy accordingly.”

Uncertainty has increased

In its post-meeting statement, the FOMC noted an elevated level of ambiguity surrounding the current climate.

“Uncertainty around the economic outlook has increased,” the document stated. “The Committee is attentive to the risks to both sides of its dual mandate.”
The Fed is charged with the twin goals of maintaining full employment and low prices.

Federal Reserve Chairman Jerome Powell delivers remarks at a news conference following a Federal Open Market Committee (FOMC) meeting at the Federal Reserve on March 19, 2025 in Washington, DC.
Kevin Dietsch | Getty Images

At the news conference, Powell noted that there had been a “moderation in consumer spending” and it anticipates that tariffs could put upward pressure on prices. These trends may have contributed to the committee’s more cautious economic outlook.
The group downgraded its collective outlook for economic growth and gave a bump higher to its inflation projection. Officials now see the economy accelerating at just a 1.7% pace this year, down 0.4 percentage point from the last projection in December. On inflation, core prices are expected to grow at a 2.8% annual pace, up 0.3 percentage point from the previous estimate.
According to the “dot plot” of officials’ rate expectations, the view is turning somewhat more hawkish on rates from December. At the previous meeting, just one participant saw no rate changes in 2025, compared with four now.
The grid showed rate expectations unchanged over December for future years, with the equivalent of two cuts expected in 2026 and one more in 2027 before the fed funds rate settles in at a longer-run level around 3%.

Scaling back ‘quantitative tightening’

In addition to the rate decision, the Fed announced a further scaling back of its “quantitative tightening” program in which it is slowly reducing the bonds it holds on its balance sheet.
The central bank now will allow just $5 billion in maturing proceeds from Treasurys to roll off each month, down from $25 billion. However, it left a $35 billion cap on mortgage-backed securities unchanged, a level it has rarely hit since starting the process.
Fed Governor Christopher Waller was the lone dissenting vote for the Fed’s move. However, the statement noted that Waller favored holding rates steady but wanted to see the QT program go on as before.
“The Fed indirectly cut rates today by taking action to reduce the pace of runoff of its Treasury holdings,” Jamie Cox, managing partner for Harris Financial Group, said. “The Fed has multiple things to consider in the balance of risks, and this move was one of the easiest choices. This paves the way for the Fed to eliminate runoff by summer, and, with any luck, inflation data will be in place where reducing the Federal Funds rate will be the obvious choice.”
The Fed’s actions follow a hectic beginning to Trump’s second term in office. The Republican has rattled financial markets with tariffs implemented thus far on steel, aluminum and an assortment of other goods against U.S. global trading partners.
In addition, the administration is threatening another round of even more aggressive duties following a review that is scheduled for release April 2.
An uncertain air over what is to come has dimmed the confidence of consumers, who in recent surveys have jacked up inflation expectations because of the tariffs. Retail spending increased in February, albeit less than expected though underlying indicators showed that consumers are still weathering the stormy political climate.
Stocks have been fragile since Trump assumed office, with major averages dipping in and out of correction territory as administration officials cautioned about an economic reset away from government-fueled stimulus and toward a more private sector-oriented approach.
Bank of America CEO Brian Moynihan earlier Wednesday countered much of the gloomy talk recently around Wall Street. The head of the second-largest U.S. bank by assets said card data shows spending is continuing at a solid pace, with BofA’s economists expecting the economy to grow around 2% this year.
However, some cracks have been showing in the labor market. Nonfarm payrolls grew at a slower-than-expected pace in February and a broad measure of unemployment that includes discouraged and underemployed workers jumped a half percentage point during the month to its highest level since October 2021.
“Today’s Fed moves echo the kind of uncertainty Wall Street is feeling,” said David Russell, global head of market strategy at TradeStation. “Their expectations are a little stagflationary because GDP estimates came down as inflation inched higher, but none of it is very decisive.”
—CNBC’s Sarah Min contributed to this report.

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Any time share prices are slumping, it is worth looking at a chart of America’s S&P 500 index that goes back to 1987. That year on October 19th, or “Black Monday”, it plummeted by 20% in a single day—a crash not equalled before or since. The shock was so great that regulators subsequently devised “circuit breakers”, which automatically halt trading after a big enough drop, to prevent a repetition. Pull up a chart stretching from then to today, however, and Black Monday is barely visible, dwarfed by the scale of the subsequent returns. For long-term investors, what felt like an earth-shaking event at the time turned out to be little more than a blip. More

U.S. Federal Reserve Chair Jerome Powell testifies before a House Financial Services Committee hearing on “The Semiannual Monetary Policy Report to the Congress,” on Capitol Hill in Washington, D.C., on Feb. 12, 2025.
Nathan Howard | Reuters

Federal Reserve officials slashed their economic outlook in the latest projections released Wednesday, seeing the U.S. economy growing at a pace lower than 2%.
The rate-setting Federal Open Market Committee downgraded its collective outlook for economic growth to 1.7%, down from the last projection of 2.1% in December. In the meantime, officials hiked their inflation outlook, seeing core prices growing at a 2.8% annual pace, up from the previous estimate of 2.5%. The moves suggested the central bank sees the risk of a stagflation scenario, where inflation rises as economic growth slows.

In a statement, the FOMC noted the “uncertainty around the economic outlook has increased,” adding that the Fed is “attentive to the risks to both sides of its dual mandate.”
Fears of an economic slowdown and inflation reacceleration have increased significantly as President Donald Trump’s aggressive tariffs on key U.S. trading partners are expected to raise prices of goods and services and dent consumer spending.
“Inflation has started to move up now. We think partly in response to tariffs and there may be a delay in further progress over the course of this year,” Fed Chair Jerome Powell said at a news conference. “Overall, it’s a solid picture. The survey data both household and businesses show significant large rising uncertainty and significant concerns about downside risks.”
For now, the Fed still expects to make two rate cuts for the remainder of 2025, according to the median projection, even as the inflation outlook was raised.
The so-called dot plot indicated that 19 FOMC members, both voters and nonvoters, see the benchmark fed funds rate at 3.9% by the end of this year, equivalent to a target range of 3.75% to 4%. The central bank kept its key interest rate unchanged in a range between 4.25%-4.5% on Wednesday.

Still, their view has leaned more hawkish in their rate projection, with four members seeing no rate changes in 2025. At the January meeting, just one official foresaw no changes in interest rates this year.
Here are the Fed’s latest targets:

Arrows pointing outwards

— CNBC’s Jeff Cox contributed reporting.

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This is a comparison of Wednesday’s Federal Open Market Committee statement with the one issued after the Fed’s previous policymaking meeting in January.
Text removed from the January statement is in red with a horizontal line through the middle.

Text appearing for the first time in the new statement is in red and underlined.
Black text appears in both statements.

Arrows pointing outwards More

The Trump administration has been extraordinarily blasé about falling stocks. “I can tell you that corrections are healthy, they are normal,” said Scott Bessent, America’s treasury secretary on March 16th, in the government’s most recent shrug. The stumble in America’s long stockmarket rally—the S&P 500 index is down by 8% from its all-time high in February—may have been prompted by Donald Trump’s enthusiasm for tariffs, but it has been exacerbated by the perception that the new administration is quite relaxed about the dip, and therefore likely to continue pursuing damaging policies. More

“We’ve got a lot of AI to build. AI is the foundation, the operating system of every industry going forward. … We are enthusiastic about building in America,” Huang said.
“Partners are working with us to bring manufacturing here. In the near term, the impact of tariffs won’t be meaningful,” he added.

Nvidia CEO Jensen Huang downplayed the negative impact from President Donald Trump’s tariffs, saying there won’t be any significant damage in the short run.
“We’ve got a lot of AI to build … AI is the foundation, the operating system of every industry going forward. … We are enthusiastic about building in America,” Huang said Wednesday in a CNBC “Squawk on the Street” interview. “Partners are working with us to bring manufacturing here. In the near term, the impact of tariffs won’t be meaningful.”

Trump has launched a new trade war by imposing tariffs against Washington’s three biggest trading partners, drawing immediate responses from Mexico, Canada and China. Recently, Trump said he would not change his mind about enacting sweeping “reciprocal tariffs” on other countries that put up trade barriers to U.S. goods. The White House said those tariffs are set to take effect April 2.
“We’re as enthusiastic about building in America as anybody,” Huang said. “We’ve been working with TSMC to get them ready for manufacturing chips here in the United States. We also have great partners like Foxconn and Wistron, who are working with us to bring manufacturing onshore, so long-term manufacturing onshore is going to be something very, very possible to do, and we’ll do it.”
Shares of Nvidia have fallen more than 20% from their record high reached in January. The stock suffered a massive sell-off earlier this year due to concerns sparked by Chinese artificial intelligence lab DeepSeek that companies could potentially get greater performance in AI on far-lower infrastructure costs. Huang has pushed back on that theory, saying DeepSeek popularized reasoning models that will need more chips.
Nvidia, which designs and manufactures graphics processing units that are essential to the AI boom, has been restricted from doing business in China due to export controls that were increased at the end of the Biden administration.
Huang previously said the company’s percentage of revenue in China has fallen by about half due to the export restrictions, adding that there are other competitive pressures in the country, including from Huawei.

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Investor uncertainty have led to volatile trading in the stock market.
They are unnerved by see-sawing Trump administration policy positions, most importantly on tariffs, experts said.
Investors don’t know how policy will impact corporate profits, experts said.

Traders on the floor of the New York Stock Exchange on March 14, 2025, at the opening bell. 
Timothy A. Clary | Afp | Getty Images

Uncertainty isn’t in short supply these days — and investors have taken notice.
See-sawing policy from the White House has given investors whiplash on many fronts — with tariffs being among the biggest question marks, market experts say.

Coupled with uncertainty around federal job cuts, negotiations to end the war in Ukraine and other issues, the combination has been “disorienting to market sentiment,” Paul Christopher, head of global investment strategy at the Wells Fargo Investment Institute, wrote Wednesday.
Stocks have wobbled amid the vertigo.
The S&P 500 entered a correction last week, meaning the U.S. stock index fell 10% from its recent high mark in February. The index has recovered a bit but teetered on the edge of a correction Tuesday afternoon.
The benchmark is down about 5% in 2025.

Uncertainty makes investors jittery — and stock markets volatile — because they don’t know how policy and other events will impact companies’ ability to make money, said Barry Glassman, a certified financial planner and founder of Glassman Wealth Services.

Worried consumers might pull back on spending, crimping profits, for example. Tariffs raise costs for certain companies to import or produce goods — and it’s unclear how other nations might retaliate. While economists generally don’t think federal trade policy and job cuts will push the U.S. into recession, Trump hasn’t ruled out that possibility.
“All of this comes down to corporate profits,” said Glassman, a member of CNBC’s Advisor Council. “People will put more dollars where they have greater confidence in the investments,” he added.

Many ‘unanswered’ questions

There’s always uncertainty in the stock market, but it may feel more acute right now than at other times, experts said.
A recent (and perhaps counterintuitive) example of that uncertainty came on March 6, when President Donald Trump reversed course and delayed 25% tariffs on many imports from Canada and Mexico by a month. That delay came two days after the tariffs had taken effect.
Despite that “reprieve,” the S&P 500 sold off sharply during the day’s trading session, BeiChen Lin, senior investment strategist at Russell Investments, said recently.
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“There are still a lot of questions that remain unanswered,” Lin said.
For example, Lin said, what would happen after the 30-day delay? How might Mexico and Canada respond? Will the U.S. impose tariffs on other countries or products?
National Economic Council director Kevin Hassett warned Monday of “some uncertainty” over Trump’s tariff policy in coming weeks. Treasury Secretary Scott Bessent said last week that the Trump administration is more focused on long-term health of the U.S. economy instead of short-term volatility.

‘It’s all based on emotion’

Brad Klontz, a certified financial planner and behavioral finance expert, said he thinks the stock market turmoil ties into something more primitive than corporate profits: Human psychology.
“Quite frankly, it’s all based on emotion,” said Klontz, managing principal of YMW Advisors in Boulder, Colorado, and a member of CNBC’s Advisor Council.
“We like to feel like we can predict the future. When we feel the future is unpredictable, when we don’t have faith in our leaders, that’s when we start to panic,” Klontz said.
“There’s a ton of fear” right now, he added.

Amid fear, it’s important for investors to put the recent market moves into perspective, advisors said.
A 10% pullback isn’t shocking after two consecutive years of annual stock returns exceeding 20%, Glassman said.
“This is normal,” Glassman said of the market’s temper tantrums.
However, investors often make bad financial choices by engaging in catastrophic thinking (believing the markets may never recover, for example), Klontz said. They buy high and sell low, he said.
Historically, the market has always bounced back higher.
“If you lost $40,000, you have to ask yourself, did you really lose it?” Klontz said. “If you didn’t sell, I’m not sure you lost it. If you sold, you guaranteed lost that $40,000.”

Focus on what you can control

During times of uncertainty, investors should focus on what they can control, Klontz said.
It’s a good time for investors to look at their asset allocation, and ensure their overall stock-bond holdings haven’t gotten too risky or conservative over time, for example, Klontz said.

The recent volatility has also shown the value of diversification among different asset classes in an investment portfolio, Glassman said.
For example, international stocks in both developed and emerging markets are up this year, even though U.S. stocks are down, Glassman said. Bond returns have also been positive, he said.
Ultimately, investor behavior is the biggest threat to stock returns, not the federal government, Klontz said. More

The British unit of Spanish lender Santander on Wednesday said 750 of its staff were at risk of redundancy as it targets 95 branch closures in the U.K.
Questions have risen over the future of Santander’s international footprint, amid reports earlier in the year that the lender could be considering an exit from Britain.
“The UK is a core market for Santander and this has not changed,” a Santander spokesperson told CNBC on Wednesday.

Jonathan Nicholson | NurPhoto | Getty Images

The British unit of Spanish lender Banco Santander on Wednesday said 750 of its staff were at risk of redundancy as it targets 95 branch closures in the U.K.
The decision is part of the bank’s broader plans to update its presence from June 2025 and will bring Santander UK’s network to 349 branches, including 290 that are full-service, 36 operating with reduced hours and 18 that are counter-free and five Work Cafes.

“Closing a branch is always a very difficult decision and we spend a great deal of time assessing where and when we do this and how to minimise the impact it may have on our customers,” a Santander UK spokesperson said.
The bank further noted a “a rapid movement of customers choosing to do their banking digitally,” flagging it has observed a 63% boost in digital transactions versus a 61% decline in dealings done at physical branches since 2019.
Santander said it was consulting unions over the proposed changes. The bank employs around 18,000 full-time staff in the U.K., according to the annual report of the British unit.
Questions have risen over the future of Santander’s international footprint, just two decades since its acquisition of Abbey National brought it to the front of Britain’s high street. At the start of the year, the Financial Times reported that the lender could be considering an exit from its U.K. operations, which Santander Executive Chair Ana Botin has since repeatedly refuted.
“The UK is a core market for Santander and this has not changed,” a Santander spokesperson told CNBC on Wednesday.

In October, Reuters reported Santander CEO Hector Grisi forecast the lender would trim more than 1,400 jobs from its British business by the time it finalizes a cost-cutting drive, without specifying a timeline.
The lender has faced some tumult in Britain, setting aside £295 million ($382.7 million) in November to cover possible payouts linked to a broader industry probe into motor finance commissions.
Back in February, Spain’s largest lender reported record fourth-quarter profit up 11% year on year to 3.265 billion euros ($3.56 billion), further announcing plans for 10 billion euros ($10.89 billion) in share buybacks from 2025 and 2026 earnings and anticipated excess capital. More