The two major lessons from this meeting were, on the one hand, the sharp fall in US GDP growth forecasts and, on the other, the need for the Fed to see more clearly before acting.

On the first point, by lowering the growth forecast for 2025 to 1.7%, compared with the 2.1% forecast last December, the Fed is acknowledging that the US economy is being negatively affected by the onset of economic and political chaos introduced by President Trump. Still, this is an important fact, confirming what many have been thinking in recent weeks.

As for the second point, one could have speculated that weaker economic and confidence data and the correction in risk assets would translate into an easing of the Fed's rate stance. But this does not appear to be the case. Admittedly, chairman Powell frequently mentioned uncertainty at the press conference, but until the activity data show a clear deterioration in activity, the Fed seems to prefer to wait. In addition, rumours that the Fed would ease policy if risk assets continued to correct seem to us to be far from the truth. The Fed would only do so if financial stability were threatened or if this risked triggering a recession, which is not currently the case.

Waiting for the dust to settle

Let's not forget that it has already cut rates by 100 basis points and thus made its policy less restrictive. Consequently, the US central bank will be wary of acting too quickly in the face of a situation that is still confused. On the one hand, growth remains positive, unemployment low and inflation rising. But on the other hand, the outlook for growth is clouded by escalating tariffs – on 2 April, the US is expected to introduce more extensive tariffs – which threaten to reduce household purchasing power and corporate profit margins. Reciprocal tariffs from foreign governments and consumer boycotts will compound the problems for US exporters. And to top it all off, government austerity is likely to weaken the job market and slow spending across the economy.

Only when the dust from these multiple shocks has settled will the Fed be able to take stock of both jobs and inflation. It should then, according to our analysis, continue its rate cuts after the summer.