Amid persistent inflation and slowing economic growth, the US Federal Reserve or Fed opted to maintain interest rates at its March 19 meeting, signalling concerns over tariff-related uncertainties and recessionary risks in the world’s largest economy.This marks the second consecutive meeting where the US central Bank – the Federal Reserve has held rates steady, while retaining its forecast for two rate cuts later this year.However, the central bank has revised its projections for inflation and economic growth, reflecting the impact of President Trump’s proposed tariffs, which come on top of existing duties on China, Canada, and Mexico.Fed officials now see inflation staying higher this year than previously estimated and economic growth going lower than prior predictions.They now anticipate core Personal Consumption Expenditures (PCE) inflation to reach 2.8% by the end of 2025, up from the previous estimate of 2.5%.Simultaneously, the US economy is expected to grow at an annualised rate of 1.7%, a downgrade from the earlier projection of 2.1%. Additionally, the unemployment rate is now forecasted to edge up to 4.4%, compared to the prior estimate of 4.3%.“There are so many things we don’t know,” remarked Fed Chair Jerome Powell during a media briefing following the meeting.He acknowledged the heightened uncertainty but noted that tariffs historically tend to suppress growth while driving inflation higher.Powell conceded that the Fed’s revised inflation outlook for this year is largely influenced by the proposed tariffs. However, he emphasised that the inflationary impact is likely to be transitory. While the path to achieving the Fed’s inflation target may face temporary delays, Powell reaffirmed the central bank’s confidence in reaching its goal by 2027.Maintaining his characteristic cautious stance, Powell reiterated the Fed’s commitment to a data-driven approach, emphasising the importance of “separating the signal from the noise” in assessing the economic effects of evolving trade policies.Earlier this year, Qatar’s QNB highlighted the substantial influence of the US on global economic growth, noting that the country accounts for approximately one-quarter of the global economy and has contributed 32% of global nominal growth since the pandemic.The onset of the Trump administration, with its strong mandate and pro-business agenda, initially suggested a shift away from conventional policymaking.Severe policy uncertainty on the trade and fiscal fronts is driving market volatility and a deterioration of investor and consumer sentiment.Mounting trade and fiscal policy uncertainties have fuelled market volatility and weakened investor and consumer confidence.Fiscal retrenchment and DOGE-sponsored initiatives are clearly affecting consumption and overall aggregate demand negatively, likely weighing on growth.In response, QNB has downgraded its 2025 US GDP growth projection to 1.5%, down from an earlier estimate of 2.2%.The proposed US tariffs are evidently dampening market optimism, resulting in reduced investment, slower consumption, and diminished global growth prospects.They also highlight tariff-related uncertainties and fears of recession in the world’s largest economy and repercussions on inter-connected economies around the world.