Volatility has rocked US markets this month, but investors on Wednesday received a welcome boost as the Federal Reserve signaled confidence in short-term stability and refrained from jolting markets with a surprise policy decision.

US stocks closed higher Wednesday as the Fed held its benchmark interest rate steady, matching expectations. US markets have been choppy this month and stocks rallied on a sense of short-term calm.

The Dow gained 383 points, or 0.92%. The broader S&P 500 gained 1.08% and the tech-heavy Nasdaq Composite rose 1.41%.

The S&P 500 posted its best gain on a Fed rate decision day since July, according to FactSet data.

Wall Street’s fear gauge, the Cboe Volatility Index, or VIX, fell almost 10% at one point on Wednesday to its lowest level since March 3, signaling a moment of relative ease.

Wall Street opened higher Wednesday morning and remained firmly in the green, surging higher after Fed Chair Jerome Powell’s remarks this afternoon signaled confidence in the economy despite uncertainty.

The S&P 500 has been trying to claw back gains after it closed in correction territory last week, down 10.1% from its record high on February 19.

Stocks rallied after closing in the red Tuesday, resuming a brief rally that began on Friday and continued into Monday. The benchmark index on Wednesday closed down 7.6% from its record high.

The yield on the 10-year Treasury fell to 4.248%.

However, the Fed in its economic projections signaled higher expectations for inflation and slower expectations for growth this year, raising questions about future policy action.

“While the outcome of this meeting was broadly in line with market participant expectations, it clearly shows the conundrum the Fed has in balancing growth and inflation expectations,” said Charlie Ripley, senior investment strategist as Allianz Investment Management.

A lot happened and, perhaps equally important, a lot didn’t happen at the Federal Reserve’s monetary policy meeting this month and subsequent press conference with Fed Chair Jerome Powell held on Wednesday.

The TL;DR (too long; didn’t read) is as follows, in no particular order:

• The window for rate cuts this year hasn’t closed, but it has narrowed with more officials predicting one or no rate cuts now compared to December.
• President Donald Trump’s tariff-heavy agenda is making Fed officials’ jobs much, much harder. That’s because the full economic impact of the tariffs Trump’s already enacted remains to be seen. On top of which, no one knows how long any tariffs he’s threatened or imposed will stay in effect, what the rates will be and how other countries will respond.
• In light of that, the economy’s still holding up well, Powell told reporters.
• But it’s not looking quite as good as it did before Trump returned to the Oval Office, according to new projections officials made.

Americans’ financial fragility is increasing, and they’re growing more pessimistic about getting approved for a mortgage, a car loan or a credit card, according to new survey data released Monday by the Federal Reserve Bank of New York.

The New York Fed’s Credit Access Survey, which is released every four months, showed that Americans became sharply more downtrodden in February about expected credit conditions as well as their own financial health.

The average likelihood of being able to come up with $2,000 if an unexpected need arose in the next month dropped to 62.7%, a record low for the survey series that was started in 2013. The share of discouraged borrowers — defined as those who did not apply for any credit because they thought they would get rejected — jumped to a new series high of 8.5% (from 6.6% in October).

Rejection rates for mortgage refinances also hit a record high for the survey series, rocketing to 41.8% from 22% in October.

While February’s report didn’t show many drastic shifts in respondents’ current credit-related experiences — the soaring refinancing rejections excluded — expectations for a new credit card, home loan or auto loan being rejected all shot higher, according to the report.

The Federal Reserve on Wednesday decided yet again to stand pat on interest rates. Despite the Fed’s inaction, there are still opportunities to maximize the interest you earn on your savings or reduce what you pay on your debts.

Even though interest rates have been coming down slowly in recent months, you can still get inflation-beating returns for your cash savings, in very easy, low-risk ways.

And even if the Fed cuts rates later this year, as many expect, how much of a difference that will make depends on the type of debt you have and the amount you owe.

Read more here.

US stocks were higher Wednesday after the Federal Reserve’s announcement it would hold rates steady.

US stocks are coming off a recent market rout, and the rate decision matching expectations provided tailwinds for a rally that had picked up steam this morning, driven higher by rebounding tech stocks.

Wall Street had expected the Fed to “stay on the sidelines” and hold rates steady, according to Charlie Ripley, senior investment strategist at Allianz Investment Management.

Stocks also rallied on the lack of surprises as the Fed’s “dot plot” showed expectations for two rate cuts this year, similar to the last projection in December.

David Russell, global head of market strategy at TradeStation, said the Fed is in “wait and see mode,” and the catalyst for markets has been more focused on recent economic data and tariff headlines. There has been a lack of recent tariff announcements which has buoyed the market.

Wall Street’s fear gauge, the Cboe Volatility Index, or VIX, fell almost 10% on Wednesday to its lowest level since March 3, signaling a moment of relative ease.

The VIX traded below the 20-point level for the first since March 3. Trading above 20 signals heightened volatility while trading below 20 signals stability.

Investors took much solace in hearing Federal Reserve Chair Jerome Powell say the economy is on solid footing despite a slew of recent economic surveys sparking concerns of the opposite.

But that “soft” data isn’t necessarily indicative of economic weakness, Powell said Wednesday. “That probably has to do with turmoil at the beginning of the administration.”

The “hard” data — which shows low unemployment, healthy levels of job creation, slowing but still-solid consumer spending — suggests the US economy is “healthy,” Powell said.

Soft data tends to refer to surveys, which are often seen as more subjective gauges of economic activity. While hard data, i.e., economic reports, are seen as more definitive, objective gauges.

“The relationship between the survey data and economic activity hasn’t been very tight,” he said. “There are times people are saying very downbeat things about the economy and then going out and buying a new car.”

“But,” Powell cautioned, “we don’t know that will be the case here. We will be watching very carefully for signs of weakness in the real data.”

For quite some time, after the Fed stopped hiking rates and started easing up a bit, it had said: “The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance.”

It didn’t say that this time.

CNN’s Matt Egan asked Federal Reserve Chair Jerome Powell whether that meant the Fed is now more concerned about inflation or employment. But Powell said it’s actually something much more benign.

“Actually it does not mean either of those things,” Powell said. “Sometimes with language it lives its useful life, and then we take it off. And that was the case. It was really not meant to be any signal here.”

Powell said it was useful language when the Fed started to transition out of punishing rate hikes to lowering rates or keeping them steady.

“We are past that,” Powell said. “So we just took it out.”

Federal Reserve Chair Jerome Powell acknowledged that the risk of recession may have grown in recent months, but he tried to soothe nerves by noting that the likelihood of an imminent economic downturn remains quite low.

“There is always an unconditional possibility of recession. It might be broadly in the range of 1 in 4 at any time if you look back through the years,” Powell said. “The question is whether this current situation — those possibilities are elevated.”

Powell noted that the Fed doesn’t make a recession forecast, although the Atlanta Fed has a “GDPNow” tool that currently predicts the economy is on pace for a slight contraction this quarter. He also noted that outside forecasters have raised the chance of a recession in recent weeks: JPMorgan now believes America faces a 40% chance of tumbling into a recession this year largely because of President Donald Trump’s tariffs and other economic policies.

“Forecasters have generally raised – a number of them have raised their possibility of a recession somewhat. But still at relatively moderate levels,” Powell said. “If you go back two months, people were saying that the likelihood of a recession was extremely low. So it has moved, but it’s not high.”

US stocks soared Wednesday as Federal Reserve Chair Jerome Powell signaled confidence in the economy despite uncertainty.

The Dow rose about 580 points, or 1.4%, to its highest level of the day. The broader S&P 500 rose 1.75% and the Nasdaq Composite rose 2.3%.

The Fed revised up its outlook for inflation and revised down its expectations for economic growth, but investors still rallied on the absence of a major surprise about rate cuts.

The three major indexes surged during Powell’s post-meeting press conference. Powell in remarks said the economic data shows overall “a solid picture,” while acknowledging there is uncertainty about the impact of tariffs.

The yield on the 10-year Treasury edged lower to 4.251%.

Wall Street gained on the steady rate decision Wednesday, but some analysts sense further turmoil on the horizon.

“No surprise that the monetary policy-setting committee kept target rates unchanged today,” said Jeffrey Roach, chief economist at LPL Financial. “The committee is in the midst of policy fog as they await the impact from upcoming tariffs.”

“As growth prospects falter and inflation remains sticky, we should expect investors to get more worried about stagflation,” Roach said.

Steve Wyett, chief investment strategist at BOK Financial, said the Fed’s statement indicates it “remains as confused as the rest of us as to what the impact of policy changes will be.”

“Clarity remains lacking for the market,” Wyett said.

There’s a growing possibility of zero rate cuts this year. That’s according to new projections that Federal Reserve officials submitted at this month’s monetary policy meeting.

Each quarter, all 19 Fed officials who attend monetary policy meetings are individually required to forecast where they believe interest rates will be by year’s end to achieve their dual mandate for price stability and maximum employment.

The median projection still predicts two rate cuts this year, unchanged from December, the last meeting such forecasts were made.

However, what’s changed is now eight officials are predicting one or no cuts this year compared to four officials in December.

Federal Reserve Chair Jerome Powell didn’t waste any time talking the “T-word” that is dominating discussions about the economy: tariffs.

In the first question of his post-meeting press conference Wednesday, Powell said it was difficult for the Fed to break out how much of the central bank’s jacked-up inflation forecast and vastly reduced economic growth predictions was because of tariffs, although he acknowledged that “a good part of it is coming from tariffs.”

Interestingly, Powell mentioned another “T-word”: “transitory.” The Fed got in some trouble a few years ago when inflation began to rise and Powell at first described it as “transitory.” As it turned out, inflation remained stubbornly high for several years.

Some economists argue that tariffs aren’t actually inflationary — they’re just a one-time price increase. In other words, they are transitory — a price increase comes, then it’s baked in, unlike other factors such as growing paychecks or supply chain snarls that can continue to raise prices for a long time.

Powell appeared to make that argument Wednesday, although he said it was too soon to know. He noted inflation was transitory “the last time there were tariffs” during Trump’s first term.

“It can be the case that it’s appropriate sometimes to look through inflation if it’s going to go away quickly without action by us — if it’s transitory,” Powell said. “And that can be the case in the case of tariff inflation. I think that would depend on the tariff inflation moving through fairly quickly.”

The Fed has a difficult enough task: It needs to make sure it can promote both high employment and low inflation, which can be competing goals. But President Donald Trump’s tariffs are complicating that delicate balancing act.

In its economic projections issued Wednesday, the Fed substantially revised down its forecast for economic growth while it jacked up its inflation expectations. The reason: “A good part of it is coming from tariffs,” Fed Chair Jerome Powell said during a press conference Wednesday.

That’s because tariffs both raise prices and can slow down the economy — the opposite of what the Fed is trying to do.

“It speaks to the adverse impact of the surge in US import tariffs underway, which will raise the prices of imported finished consumer goods and the cost to US firms, said Brian Coulton, Fitch Ratings’ chief economist. “This is making the Fed’s job a lot harder and means they will hold off on further rate cuts for quite a while.”

It’s an uncomfortable double whammy: inflation heating up at the same time unemployment grows. That’s exactly what Federal Reserve officials forecast will happen this year, according to new projections released Wednesday.

Officials believe the US unemployment rate will hit 4.4% by year’s end and that inflation, as measured by the Personal Consumption Expenditures price index, could rise to 2.7%.

That’s an uptick from the 4.3% unemployment rate and the 2.5% inflation rate officials projected for 2025 in December. It’s also a jump from the latest levels, with the unemployment rate at 4.1%, per the February jobs report, and PCE inflation, which was running at 2.5% in January.

Broadly speaking, it gives slight whiffs of stagflation, a situation where economic growth declines while prices jump. But as Fed Chair Jerome Powell said last year when there was a rise in the inflation and unemployment rates, it’s a huge stretch to refer to it as stagflation.

“I was around for stagflation. It was 10% unemployment. It was high single-digits inflation and very slow growth,” he said last May, referring to stagflation in the 1970s after a spike in oil prices during the Arab oil embargo.

The Federal Reserve likes to remind us that it has multiple arrows in its quiver to maintain America’s balance between strong economic growth and low inflation. Setting the interest rate is its most famous tool, but the Fed can also support job growth or reduce inflation by buying or selling government debt — a process known as quantitative tightening or quantitative easing.

The Fed has been in a quantitative tightening phase since 2022, selling off its massive hoard of Treasury bonds as inflation soared. In theory, QT, as it’s known, should help reduce demand for Treasuries, sending yields higher to make them more attractive. Higher yields often are mirrored by higher rates on consumer loans, such as mortgages, credit cards and car loans.

On Wednesday, the Fed said it would continue QT, but it would slow the pace down a bit. Inflation remains stubbornly high but much closer to the Fed’s 2% target than in previous years. Meanwhile, the Fed said economic growth has stabilized, as has the unemployment rate.

Starting in April, the Fed will sell up to $5 billion worth of Treasuries a month, down from $25 billion. In theory, that should help reduce bond yields — and help businesses spend more and consumers borrow more, giving the economy a slight boost.

President Donald Trump’s policies remain a big wild card for the Fed because of their potentially wide-ranging effects on the economy.

Trump’s tariffs threaten higher inflation and weaker growth, his administration’s aggressive crackdown on immigration can cause labor shortages in certain industries, his mass layoffs of federal workers could send some local economies into a recession, but his deregulation efforts and the extension of his 2017 tax cuts could promote growth.

Put together, it’s unclear what the “net effect” of Trump’s policies on the US economy will be, as measured by growth, inflation and the labor market.

US stocks were higher Wednesday after the Federal Reserve announced its decision to hold rates steady.

The Dow rose 230 points, or 0.56%. The broader S&P 500 rose 0.8% and the Nasdaq Composite rose 1.2%.

The three major indexes held on to their gains and edged higher after they had started to slide in the early afternoon ahead of the Fed’s announcement.

The Fed’s decision to hold rates steady was in line with investors’ expectations. Fed officials forecasted two rate cuts this year, according to projections, holding that outlook steady.

The Fed in a statement said inflation “remains somewhat elevated” and revised its year-end forecast for its preferred inflation gauge to 2.8%, up from 2.5%.

“Uncertainty around the economic outlook has increased,” the Fed said in a statement.

Traders had begun factoring in the potential for “higher-for-longer” rates back in December, after the Fed signaled that it might put a pause on cutting rates in early 2025.

The yield on the 10-year Treasury edged lower to 4.277%.

The US dollar index, which measures the dollar’s strength relative to six other currencies, edged lower after slightly gaining this morning.

Investors will be focused on Fed Chair Jerome Powell’s remarks at 2:30 p.m. ET.

Perhaps the biggest news from the Federal Reserve’s March monetary policy meeting was that officials believe the economy is on track to grow at a much slower pace now compared to before President Donald Trump returned to the White House.

Officials now believe US gross domestic product will grow at an annual rate of 1.7%, whereas in December they projected a 2.1% pace, according to new median forecasts that were released Wednesday afternoon. The revised estimate represents a nearly 20% decline in the annual projected US economic growth rate.

This comes as Trump’s tariff policies have taken a considerable toll on the economy, with both consumer and business sentiment plunging. In addition, consumer spending, the backbone of the US economy, which accounts for more than two-thirds of US GDP, has been flashing a big warning sign. It declined in January and while it increased last month compared to the prior month, it was well below economists’ expectations.

The Fed’s projections, however, look relatively good compared to the Atlanta Fed’s real-time GDP forecasting tool, which is currently pointing to a first-quarter decline in GDP.

Federal Reserve officials forecast two rate cuts this year, according to new median projections released Wednesday.

That’s the same number they penciled in at December’s monetary policy meeting, the most recent time officials submit interest rate projections.

This comes as economic conditions have worsened since President Donald Trump returned to the White House with the prospect of much higher tariffs on top of the ones that he’s already enacted.

The Federal Reserve on Wednesday kept interest rates unchanged as central bank officials weigh the impact of President Donald Trump’s aggressive economic agenda.

Wednesday’s decision, which comes at the conclusion of the Fed’s two-day monetary policy meeting, shows that central bankers are waiting for evidence that inflation is headed toward their 2% target — or that the economy is weakening more than expected.

Those are the two outcomes that would put rate cuts back on the table. Officials still expect to trim borrowing costs twice this year, according to their latest economic projections released Wednesday.

The Fed’s key borrowing rate remains in the 4.25% to 4.5% range. Standing pat also allows Fed policymakers to see how the Trump administration’s flurry of policy changes ultimately affects the US economy. That includes hefty tariffs, mass deportations and a downsizing of the federal workforce.

Officials in their policy statement acknowledged the higher level of uncertainty these days, a lot of it stemming from Trump’s shock therapy. In recent speeches, officials have said they’re willing to adjust interest rates in either direction, depending on what economic figures show.