The Only Certainty Is Uncertainty

The March meeting did not offer much new in the “dots”, but Chair Powell’s language made one shift clearer: the Fed is once again balancing two mandates that are no longer moving comfortably together. “We are balancing these two goals in a situation where the risks to the labor market are to the downside, which would call for lower rates, and the risks to inflation are to the upside, which would call for higher rates, or not cutting anyway.” That is a sharper framing than January, when Powell said risks to both sides of the mandate had “diminished a bit” and that while tension remained, “it’s less than it was.”

The economic backdrop had weakened meaningfully heading into this meeting. 4Q25 GDP was revised in half, from 1.4% to 0.7%, while February Non-Farm Payrolls, expected at +55k, instead showed a net loss of 92k jobs, with prior months revised lower as well. January still allowed officials to point to labor stabilization. By March, that argument had become harder to defend.

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