In this video, Vanessa Welch, Empower vice president for financial insights, and Marta Norton, Empower chief investment strategist, reflect on the latest rate decision from the Federal Reserve during its March 2025 meeting. Here is a transcript:

Marta Norton: Powell did draw that connection from tariffs to uncertainty.

Vanessa Welch: As expected, the Fed kept rates steady for the second consecutive meeting. But, Marta, the real story here is the Fed's economic projections have shifted. We're seeing a view on slowing growth and also sticky inflation that we didn't see back in January.

Norton: Right. So, with this meeting, we got the summary of economic projections, and that's where we see those numbers move — with growth coming down relative to expectations prior, also higher inflation and unemployment moving modestly higher from 4.3% to 4.4%.

Welch: To me, it felt like there was a heightened sense of uncertainty today. Did you get that same feeling?

Norton: I did get that that sense — both from the changes in the projections and then also from Powell's own comments around uncertainty.

Welch: Is this related to tariffs, do you think?

Norton: So, Powell did draw that connection from tariffs to uncertainty. But interestingly, while he pointed out that tariffs are all the talk of the town right now, he said what really matters when the Fed is working through its monetary policy is the net effect of all the fiscal policy changes. So, of course that includes tariffs, but I think we can also point to things like expected changes in tax policy or what's happening on the immigration front or deregulation.

Welch: Powell's press conference comments we know are always scrutinized, maybe even more so today than normal. Well, what jumped out to you this afternoon?

Norton: Okay. Well, one thing that I really took note of is that Powell made a distinction between short-term outcomes and long-term outcomes. So, he pointed out that the inflation expectation moves up for 2025 but then comes down in later years. And that view is consistent with an expectation that tariffs would cause a one-time price adjustment.

Welch: Okay, one last question. The expectation for rate cuts in 2025?

Norton: Okay, so the Fed seems to be centering around this idea of two cuts in 2025. But I think what's really important is they're also highlighting the uncertainty — highlighting that they don't know exactly how things are going to play out — and they're at a point where the economic data is strong enough that they can wait and see before making a decision.

Welch: Yeah, great perspective, Marta. Thank you so much. And, you know, the Fed's cautious stance holding those rates steady while lowering growth expectations, it's another reminder to me that careful diversified investing can be a good approach in these uncertain times. Marta, thanks again, and thanks to you for watching. Have a great rest of the week.