Last week, the central bank of the United States for the second time decided to leave the federal funds interest rate unchanged, given economic growth of 2.3 percent in the last quarter of last year, with unemployment at 4.1 percent and declining inflation approaching the 2 percent objective. Also contributed to the pause the expectations generated by the policy changes announced by the new administration, mainly in four sectors: international trade, immigration, taxes and the reduction of the federal government.   

The decision-making style exhibited by the new administration has generated high levels of uncertainty among consumers and investors, as revealed by last week’s correction in the stock market. On international trade, for instance, some tariffs have been announced and then postponed. President Trump proclaimed next April 2 as “Liberation Day,” because on that day reciprocal tariffs were going to be applied against the imports of mostly those countries that have a trade surplus with the United States. However, recently it was learned that the list of countries could be narrowed, while certain products, such as autos and microchips, may be excluded. Meanwhile, several measures adopted by executive order have been challenged in court, as in the case of the closing of some agencies, or the deportation of some immigrants.

A National Federation of Independent Business poll among small businesses revealed the second highest level of uncertainty in 51 years, after registering the highest level in October, before the election (The Wall Street Journal 03/24/25). Therefore, central bank Chairman Jerome Powell said it is necessary to separate “the signal from the noise as the outlook evolves.”

Transcript of Chair Powell’s Press Conference – March 19, 2025