A screen broadcasting a news conference by U.S. Federal Reserve Chair Jerome Powell after a rate announcement, on the floor of the New York Stock Exchange on March 19, 2025.
Brendan McDermid | Reuters
The U.S. Federal Reserve concluded its meeting exactly as market watchers had expected: by keeping interest rates steady. While a cut might have been a pleasant surprise to some — as lower interest rates generally support the economy and stock market — it could also have intensified investors’ worries that the economy is headed south.
It was the Fed’s dot plot, or a projection of where central bankers think interest rates will end up in the upcoming years, that provided the balm. Going into the meeting, some investors were concerned that the Fed may refrain from cutting interest rates this year given the uncertain effects on inflation by U.S. President Donald Trump’s tariffs.
But the Fed decided to retain its estimated two cuts for 2025, which helped the stock market bounce. In these volatile times, acting as anticipated, and reinforcing expectations when doubts creep in can have a more decisive impact than any surprise stimulus measures.
What you need to know today
Fed held rates, sees two cuts this year
The U.S. Federal Reserve on Wednesday decided to keep its key borrowing rate between 4.25%-4.5%, as expected by markets. Central bankers indicated they still see half a percentage point of rate cuts, which typically means two reductions, this year. The Fed also lowered its projection for U.S. economic growth in 2025 to 1.7% from 2.1% in December, while raising its inflation outlook to 2.8% from 2.5%. Fed Chair Jerome Powell at his press conference pointed out risks from tariffs, but said they could be “transitory.”
Chinese central bank keeps rates steady
The People’s Bank of China on Thursday also held its key lending rates, keeping the 1-year loan prime rate at 3.1% and the 5-year rate at 3.6%. The former influences short-term loans, while the latter serves as a benchmark for mortgages. After the rate announcement, the yuan was little changed, trading at 7.2280 against the greenback while yield on the 10-year government bonds fell more than 2 basis points to 1.932%.
Prospective rate cuts boost U.S. stocks
U.S. markets rallied Wednesday as market participants cheered the Fed’s decision to retain its forecast of two rate cuts this year. The S&P 500 climbed 1.08%, the Dow Jones Industrial Average rose 0.92% and the Nasdaq Composite jumped 1.41%. Asia-Pacific stocks traded mixed Thursday. China’s CSI 300 fell almost 1% as data showed the country’s youth unemployment rising to 16.9% in February, a four-month high.
Economic growth ‘better than people think’
Bank of America CEO Brian Moynihan told CNBC Wednesday that even though “the consumer is saying, ‘I’m getting more pessimistic,’ in some of the surveys and things like that,” shoppers are still continuing to spend, “which means the economy ought to be holding up better than people think.” That means gross domestic product this year could still grow around 2%, rather than the nearly 3% of 2024 and 2023.
SoftBank to acquire Ampere Computing
SoftBank Group said Wednesday that it will acquire Ampere Computing, a startup that designed an Arm-based server chip, for $6.5 billion. The Japanese giant expects the deal to close in the second half of 2025, according to a statement. Ampere will operate as an independent subsidiary and will keep its headquarters in Santa Clara, California, according to SoftBank.
[PRO] Wall Street heard one message from Fed
The Fed discussed a range of topics at its meeting and press conference, such as projections of interest rates, inflation and gross domestic product this year, as well as the potential impacts of U.S. President Donald Trump’s tariffs. But Wall Street seemed to hear just one message — and it helped stocks bounce Wednesday.
And finally…
Thyssenkrupp marine systems CEO Oliver Burkhard (4th R), German Defence Minister Boris Pistorius (6th R) and Mecklenburg-Western Pomerania’s State Premier Manuela Schwesig (8th R) during their visit of a shipyard of Thyssenkrupp Marine Systems that will build military submarines on Jan. 17, 2025 in Wismar, Germany.
Morris Macmatzen | Getty Images News | Getty Images
ThyssenKrupp’s warship division expects its market size to triple as defense spending surges
German naval systems maker ThyssenKrupp Marine Systems expects its market size to triple by the end of the decade, according to CEO Oliver Burkhard. “This attainable market in electronics, drones, surface vessels and submarines, we expect that it’s doubling or even tripling by the end of this decade,” Burkhard told CNBC on the sidelines of the Singapore Defense Technology Summit.
That comes on the back of the German parliament voting in favor of a major fiscal package, which includes changes to long-standing debt policies to enable higher defense spending. Burkhard said the move shows that “when it comes to the defense budget, there is more or less no limit anymore.”
