FOMC March Meeting Recap: Fed Rates Remain Unchanged; What’s Next for Investors?

The Federal Reserve met on March 19, and has decided to keep interest rates unchanged, maintaining the federal funds rate at its current level of 4.25%-4.50%.¹ While some market participants had hoped for an early rate cut, the Fed signaled a cautious approach, emphasizing the need for more economic data before making adjustments.²

With inflation still above target and labor market conditions remaining resilient, policymakers believe maintaining the current rate is the best path forward. However, investors are now looking ahead, speculating on when the first rate cut of 2025 might occur.

What Does the FOMC Do?

As the Federal Reserve’s policymaking body, the Federal Open Market Committee (FOMC) is responsible for Open Market Operations, which consist of the purchase and sale of securities in the open market by a central bank. These operations are a key tool used by the Federal Reserve in the implementation of monetary policy.

The FOMC meets eight times scheduled throughout the year, with additional meetings added if needed, to assess economic and financial conditions and determine whether to raise, lower, or maintain the federal funds rate, a key benchmark that influences borrowing costs across the economy, which could affect mortgages, business investments, and financial market conditions.³

The FOMC was established under the Banking Act of 1933 and has played a central role in shaping U.S. monetary policy for decades. It consists of 12 members, who analyze a range of economic data, including inflation, employment, GDP growth, and financial market trends, to make informed decisions on interest rates.⁴

Currently, the FOMC is led by Chair Jerome Powell, who has held the position since 2018 after being appointed by President Donald Trump and later reappointed by President Joe Biden in 2024.⁵ Powell’s leadership has guided the Fed through major economic shifts, including the COVID-19 pandemic, inflationary pressures, and the ongoing effort to balance economic growth with financial stability. His statements and policy decisions are closely watched by investors, businesses, and consumers alike, as they provide insight into the Fed’s outlook for the economy.

What Does This Mean for Private Equity?

For private equity, a stable rate environment brings both questions and potential challenges. While elevated borrowing costs remain in place, firms that have already adapted to higher interest rates may continue to find attractive investment opportunities.

At the same time, deal-making activity could potentially benefit from improved predictability, as investors gain more clarity on the Fed’s long-term strategy. That said, with future rate cuts possibly still on the table later in 2025, private equity firms will be watching economic trends closely to time new acquisitions and financing strategies.

How The Fed Decision Could Affect Public Markets

Public markets may react with mixed sentiment to the Fed’s decision. On one hand, holding rates steady may suggest the central bank is confident in the economy’s resilience, which could provide some reassurance to investors. On the other hand, traders who were hoping for a March rate cut may adjust their expectations, leading to potential short-term volatility.

Looking ahead, markets may be sensitive to upcoming economic reports, including inflation data and labor market trends. If economic conditions soften in the coming months, the Fed may still move toward rate cuts later this year, potentially providing relief to both equity and bond markets.

What Factors Play a Role in The Fed’s Decision?

The Fed considers several factors when setting interest rates.

Personal Consumption Expenditures (PCE) Price Index

The Personal Consumption Expenditures (PCE) Price Index – known as the Federal Reserve’s preferred inflation measure – measures changes in consumer spending on goods and services, serving as the Federal Reserve’s preferred inflation gauge. It reflects price fluctuations and adjusts for consumer behavior, making it one of the indicators for monetary policy. The Fed seeks to achieve inflation at the rate of 2% over the longer run as measured by the annual change in the price index for personal consumption expenditures (PCE).⁶

As previously mentioned, the latest personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred inflation measure, rose 2.5% in January on an annual basis.⁷

Consumer Price Index (CPI)

The Consumer Price Index (CPI) measures the average price change over time of goods and services, reflecting inflation levels. The Federal Reserve monitors CPI to assess inflationary pressures and guide monetary policy decisions. The most-recent CPI report accelerated a seasonally adjusted 0.5% in January, putting the annual inflation rate at 3%.⁸

Jobs Report

The Fed keeps a close eye on labor market data when making rate decisions. Between September and December 2024, the Fed cut the federal funds rate by 1.00%—the first cut in over four years—partly in response to early signs of early labor market weakness. So far in 2025, the Fed has held rates steady, signaling a more cautious approach to further cuts.⁹ In August 2024, Powell stated that “The labor market is no longer overheated, and conditions are now less tight than those that prevailed before the pandemic,” during a speech in Jackson Hole, Wyoming.¹⁰

Other Factors

Additionally, the Fed considers a range of economic and financial indicators when making rate decisions. Factors like GDP growth, consumer spending, financial market conditions, and global economic trends all play a role in shaping monetary policy. The Fed also assesses credit markets, geopolitical risks, and overall financial stability to ensure its actions support potential sustainable economic growth. By evaluating these broader influences, the Fed aims to strike a balance between fostering economic expansion and maintaining stability in the financial system.¹¹

When is The Next FOMC Meeting?

The Fed’s next meeting is on May 6-7. In total, the FOMC has eight meetings scheduled for 2025, with the final one set for December 9-10.¹² Each meeting provides an opportunity for policymakers to assess economic conditions and possibly adjust interest rates, making these dates important for investors, businesses, and anyone keeping an eye on financial trends.

Article Sources

1. https://www.cnbc.com/2025/03/19/fed-rate-decision-march-2025.html ↩︎
2. https://www.reuters.com/markets/us/feds-williams-says-monetary-policy-right-place-amid-notable-uncertainty-2025-03-21/ ↩︎
3. https://www.federalreserve.gov/monetarypolicy/fomc.htm ↩︎
4.  https://en.wikipedia.org/wiki/Federal_Open_Market_Committee ↩︎
5. https://en.wikipedia.org/wiki/Jerome_Powell ↩︎
6. https://www.federalreserve.gov/economy-at-a-glance-inflation-pce.htm ↩︎
7. https://www.cbsnews.com/news/pce-report-inflation-federal-reserve-february-2025/ ↩︎
8. https://www.cnbc.com/2025/02/12/cpi-january-2025.html ↩︎
9. https://www.usbank.com/investing/financial-perspectives/market-news/effect-of-job-market-on-the-economy.html ↩︎
10.  https://www.federalreserve.gov/newsevents/speech/powell20240823a.htm? ↩︎
11. https://en.wikipedia.org/wiki/Federal_Reserve ↩︎
12. https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm ↩︎