The Federal Reserve’s FOMC statement from March 19, 2025, reflects key changes from the January 29 statement. It removed the phrase indicating that risks to employment and inflation goals were balanced.
The recent economic indicators show steady expansion, with the unemployment rate stabilising at a low level and inflation remaining elevated. The target range for the federal funds rate is maintained at 4.25% to 4.50%.
The Committee will reduce monthly Treasury securities redemptions from $25 billion to $5 billion starting in April, while keeping the agency debt limit at $35 billion. Assessments of monetary policy will continue to include various economic data.
Shift In Policy Messaging
This latest statement shows a shift from January’s message, particularly in its removal of language that previously suggested balance between inflation and employment risks. That change has weight. It signals that policymakers no longer see these forces as offsetting each other. If one was hoping for a clear indication of monetary direction, this subtle revision hints at what matters most now.
Powell and his colleagues note that the economy remains on a steady path. Labour market conditions aren’t tightening further, yet they also show no signs of deterioration. That is meaningful. It suggests that employment strength alone is unlikely to sway future decisions. Inflation, meanwhile, continues to run at levels that exceed past targets, which is a concern.
With interest rates unchanged for now, the Committee’s next steps will be guided by incoming data. There is no direct commitment here to future hikes or cuts, only a clear willingness to respond as needed. The shift in balance—removing the notion of risks being evenly weighed—indicates which threat takes priority. Price pressures have yet to ease enough to warrant a different stance.
Adjustments To Balance Sheet Policy
A noteworthy adjustment comes in the pace of balance sheet reductions. From April onwards, Treasury redemptions will slow, while agency debt caps remain untouched. Lower Treasury runoff means fewer government securities maturing without reinvestment. That change, while not dramatic, reduces the pace at which liquidity is withdrawn. How markets interpret this—whether as a signal of caution or as a routine adjustment—will shape reactions in the near term.
Monetary policy assessments won’t rely on just one or two figures. Inflation, employment, and broader financial conditions will all matter. Powell’s team keeps the door open, making it clear that any future moves will follow where the numbers lead.
