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FOMC Economic Projections Support Multiple Fed Rate Cuts
On March 19, the Fed maintained interest rates at 4.5%, aligned with market expectations. However, the FOMC Economic Projections eased concerns about a more hawkish Fed rate stance stemming from US tariffs. Key revisions included:
- PCE inflation: Raised from 2.5% to 2.7%.
- Unemployment rate: Revised from 4.3% to 4.4%
- 2025 GDP growth: Lowered from 2.1% to 1.7%.
- 2025 Fed Interest rate: Unchanged at 3.9%.
The Fed’s rate path outlook suggested a stronger focus on economic growth rather than price stability, tempering recession fears.
Asian Market Implications: Wednesday’s US market gains on the Fed’s rate path outlook set the tone for the Asian session on Thursday, March 20.
People’s Bank of China Leaves Rates Steady
On March 20, the People’s Bank of China maintained the one-year and five-year loan prime rates (LPR) at 3.1% and 3.6%, respectively. Thursday’s decision to hold rates came despite the PBoC’s recent pledge to cut interest rates when required, which impacted investor sentiment.
Notably, the PBoC’s hold and the lack of fresh stimulus measures from Beijing likely triggered profit-taking, overshadowing Wall Street’s gains.
Hang Seng Index Slides as Tech and Real Estate Sell-Off
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