Overview: While there was plenty of major economic news over the past week, there were few surprises. Wednesday’s Federal Reserve meeting continued to send the message that officials will wait to see the impact of tariffs on the economy before making monetary policy changes. Consumer spending was relatively close to expectations, causing little reaction. As a result, mortgage rates ended the week nearly unchanged.
As expected, the Fed held the federal funds rate steady at a target range of 4.25% to 4.50%. The meeting statement acknowledged that “uncertainty around the economic outlook has increased,” and officials will patiently evaluate the impact of government policy changes to determine future monetary policy decisions. Overall, the “dot plot” projections for future rate cuts were similar to their last set of dot plots released three months ago. Officials forecast two additional 25 basis-point rate cuts in 2025 and two more in 2026. Also notable, the Fed will slow the reduction in its holdings of Treasuries on its balance sheet, while keeping the same pace for mortgage-backed securities.
After unexpectedly posting a large decline in January, partly due to severe weather in many areas, consumer spending rose modestly in February. Retail sales increased 0.2% from January and were 3.1% higher than a year ago. Categories showing strength included personal care and online outlets, while bars and restaurants posted declines.
Investors are now watching more closely a monthly report on import prices from the Bureau of Labor Statistics, which has generally not received much attention in the past. February Import Prices, which are measured before any tariffs are imposed, were expected to be roughly flat from January, but instead they climbed 0.4%. Investors are looking to see if exporters in other countries will lower their prices at all to offset higher tariffs, or whether U.S. households and businesses will bear the full costs.
Retail Sales (% change)
Week Ahead
March 20
Existing-Home Sales report
March 25
New-Home Sales report
Consumer Confidence Index
March 28
Personal Income and Outlays
Personal Consumption Expenditures (PCE) Price Index
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