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Dive Insight:

The Federal Reserve on Wednesday downgraded its forecast for economic growth in 2025 to 1.7% from 2.1% in December, with policymakers noting that “uncertainty around the economic outlook has increased.”

Despite the markdown in growth, policymakers decided to maintain the federal funds rate at a range between 4.25% and 4.5%.

“Growth looks like it’s maybe moderating a bit, consumer spending moderating a bit, but still at a solid pace,” Fed Chair Jerome Powell said during a press conference after a two-day Federal Open Market Committee meeting.

Economists at several organizations have recently warned of trade war risks and forecast slower economic growth this year. Goldman Sachs predicts a 1.7% expansion, and the Organization for Economic Cooperation and Development expects a 2.2% gain in gross domestic product.

“The high level of geopolitical and policy uncertainty at present brings with it substantial risks to the baseline projections” for the U.S. and several economies worldwide, the OECD said.

President Donald Trump has said he plans to announce reciprocal tariffs on U.S. trade partners on April 2 — what he calls “Liberation Day for America.”

Amid predictions of weaker growth, the U.S. labor market shows signs of holding up.

Claims for unemployment insurance rose by 2,000 to 223,000 during the week ended March 15, the Labor Department said Thursday.

Continuing claims, representing the number of jobless workers receiving benefits, rose to 1.89 million during the week ended March 8, according to the Labor Department. The data aligned with forecasts.

“In the labor market, conditions remain solid,” Powell said, noting that the economy has added an average of 200,000 jobs per month over the past three months and the unemployment rate, now at 4.1%, has stayed in a narrow range during the past year.