Stocks rose on Wednesday after the Federal Reserve did not change fees as central banks and investors continue to assess how President Trump's tariff policies will affect economic growth.
The Dow Jones industrial average jumped to 42,058 to 476 points (1.2%). The S&P 500 scored 1.4%, while Nasdaq reached 310 points (1.8%).
The central bank has not changed overnight interest rates in the 4.25%-4.50% range, indicating that there is likely a two-quarter-point interest reduction later this year, the same median forecast as three months ago. The Fed also predicts slower economic growth and higher inflation.
There was considerable disagreement among policymakers about the appropriate policy path, pointing to uncertainty among members about how to deal with the impact of Trump administration's policies.
The Fed also said it would reduce the pace of drawdowns on its still-attached balance sheets as it faces challenges in assessing market liquidity during an ongoing impasse in Congress lifting government borrowing restrictions.
Matthias Scheiber, head of the Multi-Asset Solutions team at London's Allspring Global Investments, said the Fed had “taken a widely anticipated 'wait' approach to rates,” saying “given the growing concerns about tariffs and how they will affect US growth and inflation.”
Scheiber added: “In 2025, the interest rate market currently expects the Fed to cut interest rates to around 3.75% by the end of the year, which will depend heavily on how the inflation-growth trade-off occurs.
According to data compiled by LSEG, traders still have at least 25 point cuts down by December, resulting in lower costs from at least 25 base point cuts.
