March 19 Federal Reserve Notes
Using information from First Trust Research report dated 3/19/25
Brian S. Wesbury, Chief Economist Robert Stein, Deputy Chief Economist
Yesterday the Federal Reserve held interest rates steady and downgraded the outlook for economic growth projections showing a 1.7% GDP growth vs. a previous 2.1%. Meanwhile PCE (the way the Federal Reserve measures inflation) is now forecasted to rise 2.7% vs. 2.6% previously forecasted.
Normally slowing economic numbers may suggest a faster pace of rate cuts, however with slightly rising inflation this may act as a counter to a more “normal” policy.
During the press conference, Powell acknowledged that tariffs have brought uncertainty to the outlook, particularly as it relates to inflation. While it is unclear just how tariffs will ultimately be rolled out, for how long, and if/how countries will retaliate, consumers and businesses are already reacting with changes in activity. The incoming data is showing a weakening economic environment. For the time being, the Fed plans to wait patiently on the sideline and watch how this all plays out, and the markets will wait for them to signal when it is the next time to move.
Taken together this information can be very difficult to handicap where we go from here. Long term investors should continue to understand volatility is a part of life and investing and look for opportunities to get cash to work.
As Mr. Wesbury and Stein say in their research report
“The era of easy everything is over”
In truth, for almost a year now we have known this time was coming. This does not mean it is time to sound alarms, unwind positions and pay the costs of those types of mistakes (taxes and opportunity cost of missing out) but to understand markets can be volatile despite recent experience. The good news is, markets are not acting irrational, stay tuned.
The opinions contained in this material are those of the author, and not a recommendation or solicitation to buy or sell investment products. This information is from sources believed to be reliable, but Cetera Financial Specialists LLC or Cetera Investment Advisers LLC cannot guarantee or represent that it is accurate or complete.