Finance

Stagflation? Fed sees higher inflation and an economy growing by less than 2% this year

Published

4 weeks ago

March 19, 2025

U.S. Federal Reserve Chair Jerome Powell testifies before a House Financial Services Committee hearing on “The Semiannual Monetary Policy Report to the Congress,” on Capitol Hill in Washington, D.C., U.S., February 12, 2025.

Nathan Howard | Reuters

Federal Reserve officials slashed their economic outlook in the latest projections released Wednesday, seeing the U.S. economy growing at a pace lower than 2%.

The rate-setting Federal Open Market Committee downgraded its collective outlook for economic growth to 1.7%, down from the last projection of 2.1% in December. In the meantime, officials hiked their inflation outlook, seeing core prices growing at a 2.8% annual pace, up from the previous estimate of 2.5%. The moves suggested the central bank sees the risk of a stagflation scenario, where inflation rises as economic growth slows.

In a statement, the FOMC noted the “uncertainty around the economic outlook has increased,” adding that the Fed is “attentive to the risks to both sides of its dual mandate.”

Fears of an economic slowdown and inflation reacceleration have increased significantly as President Donald Trump‘s aggressive tariffs on key U.S. trading partners are expected to raise prices of goods and services and dent consumer spending.

“Inflation has started to move up now. We think partly in response to tariffs and there may be a delay in further progress over the course of this year,” Fed Chair Jerome Powell said at a news conference. “Overall, it’s a solid picture. The survey data both household and businesses show significant large rising uncertainty and significant concerns about downside risks.”

For now, the Fed still expects to make two rate cuts for the remainder of 2025, according to the median projection, even as the inflation outlook was raised.

The so-called dot plot indicated that 19 FOMC members, both voters and nonvoters, see the benchmark fed funds rate at 3.9% by the end of this year, equivalent to a target range of 3.75% to 4%. The central bank kept its key interest rate unchanged in a range between 4.25%-4.5% on Wednesday.

Still, their view has leaned more hawkish in their rate projection, with four members seeing no rate changes in 2025. At the January meeting, just one official foresaw no changes in interest rates this year.

Here are the Fed’s latest targets:

— CNBC’s Jeff Cox contributed reporting.

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Finance

Goldman Sachs (GS) earnings Q1 2025

Published

4 hours ago

April 14, 2025

Business Finance News

David Solomon, CEO of Goldman Sachs, testifies during a Senate Banking Committee hearing at the Hart Senate Office Building in Washington, D.C., on Dec. 6, 2023.

Win Mcnamee | Getty Images

Goldman Sachs is scheduled to report first-quarter earnings before the opening bell Monday.

Here’s what Wall Street expects:

Earnings: $12.35 per share, according to LSEG
Revenue: $14.81 billion, according to LSEG
Trading Revenue: Fixed Income of $4.56 billion and Equities of $3.65 billion, per StreetAccount
Investing Banking Revenue: $1.94 billion, per StreetAccount

Goldman Sachs may prove to be a beneficiary of the recent market environment.

On Friday, rivals JPMorgan Chase and Morgan Stanley each topped expectations for first-quarter results on booming equities trading.

Equities trading revenue surged 48% and 45% at the banks, respectively, thanks to volatility in the opening months of President Donald Trump’s tenure amid his efforts to reshape global trade agreements.

Buoyant markets during most of the quarter, which ended March 31, should also support the bank’s wealth and asset management division, which CEO David Solomon has called the growth engine of the bank.

But markets have churned since Trump escalated trade tensions last week, sowing uncertainty across the world’s largest economy. Goldman shares have dropped 14% this year through Friday.

Analysts will be keen to hear what Solomon has to say about his conversations with corporate clients and institutional investors during the tumult.

This story is developing. Please check back for updates.