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Fed pauses while further assessing inflation, Trump policies... The Federal Open Market Committee voted unanimously on Wednesday to keep the Fed funds rate in a range of 4.25% to 4.50%, pausing the monetary easing cycle after lowering rates by a full percentage point since September.
Fed officials noted inflation remains “somewhat elevated,” while removing a reference in the post-meeting notes saying there was progress toward the committee’s 2% goal. Policymakers reiterated that the risks to their inflation and employment goals are “roughly in balance” and that the “extent and timing” of additional rate adjustments will depend on incoming data and the outlook.
In reference to the labor market, the statement noted: “The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid.”
The Fed maintained the monthly cap on the amount of Treasuries it allows to mature each month without being reinvested at $25 billion, while keeping the cap for mortgage-backed securities unchanged at $35 billion.
Fed Chair Jerome Powell noted policymakers are in no hurry to make further adjustments to monetary policy. He said it is too soon to say what President Donald Trump’s policies will do and the central bank will take its time assessing impacts. “We don’t know what will happen with tariffs, with immigration, with fiscal policy and with regulatory policy,” Powell said. “We are going to be watching carefully.”
Lutnick: Canada, Mexico can avoid U.S. tariffs if they act quickly... Howard Lutnick, President Donald Trump’s pick for Commerce secretary, told a Senate confirmation hearing Canada and Mexico can avoid an imminent tariff threat from the U.S. if they take action on illegal migration and fentanyl. Lutnick said Trump’s Saturday deadline to impose 25% tariffs on goods from Canada and Mexico was meant to put pressure on the two countries to stop those flows into America.
He noted those tariffs were separate from a broad effort by the Commerce Department, the U.S. Trade Representative’s office and the Treasury Department to review trade relations and tariffs by April 1.
Lutnick repeatedly called for restoring “reciprocity” in trade with other countries, in line with Trump’s pledge to erect a universal 10% tariff on all imports. He prefers “across-the-board” tariffs rather than aiming them at particular products in a tit-for-tat exchange.
Of note, Lutnick said tariffs on China should be higher compared to those on other countries. “I think Chinese tariffs should be the highest. Our adversaries should be the highest,” he said.
Lutnick also said he wanted to improve U.S. access to Canada’s dairy market. He said, “Canada treats our dairy farmers horribly. That’s got to end.”
Trump reverses partial federal aid freeze... President Donald Trump has rescinded an order freezing an array of federal grants, loans and financial assistance, a dramatic reversal after a federal judge blocked the spending freeze on Tuesday. In a short memo to the heads of executive departments or agencies, Office of Management and Budget Acting Director Matthew Vaeth said the order was “rescinded.”
White House Press Secretary Karoline Leavitt said executive orders, banning the use of federal funds for diversity programs, abortion and other policy priorities opposed by the new Trump administration, “remain in full force.”
Bovine TB discovered in Michigan cattle herd... Michigan’s ag department reported a case of bovine tuberculosis (TB) in a beef herd from Alcona County, located in Michigan’s Modified Accredited Zone (MAZ). It was detected during the herd’s regular annual whole herd surveillance test. This is the state’s first bovine TB-infected herd detected since January 2022.
“The annual whole herd surveillance testing performed on all commercial cattle herds in the MAZ is a critical tool for identifying new cases of bovine TB, which then decreases the opportunities for the disease to spread,” said State Veterinarian Nora Wineland.
Bovine TB is a bacterial disease that can affect all mammals, including humans. It is known to be present in the free-ranging white-tailed deer population in specific areas of northeastern lower Michigan, and the disease can be transmitted between deer and cattle. As a result, there are currently two TB zones within the state: a four-county area in northern lower Michigan called the MAZ and the remainder of the state is referred to as the Accredited Free Zone.
Canada cuts rates, says tariffs could stoke persistent inflation... The Bank of Canada lowered its key policy rate by 25 basis points to 3% and cut growth forecasts, while noting it was concerned that U.S. tariffs could stoke persistently high inflation. This marked the sixth time in a row the bank has cut rates.
The central bank lifted its forecast for inflation to 2.3% from 2.2% in 2025 and to 2.1% from 2.0% for 2026. The projections do not take into account possible U.S. tariffs.
“A long-lasting and broad-based trade conflict would badly hurt economic activity in Canada,” said Bank of Canada Governor Tiff Macklem. The prospect of such a war is clouding the economic outlook. Macklem said that a big increase in tariffs would have an initial, one-off impact on Canada that monetary policy could not do much to counter.
The bank said in its monetary policy report that if Canada and other nations slapped a retaliatory 25% tariff on the United States, this could cut Canadian growth by 2.5 percentage points in the first year and another 1.5 percentage points in the second year.