Traders work on the floor of the New York Stock Exchange on Feb. 13, 2025.
U.S. Treasury yields edged lower on Wednesday after the Federal Reserve kept benchmark interest rates unchanged but downgraded its collective outlook for economic growth while raising its inflation forecast.
The benchmark 10-year Treasury note yield slipped more than 3 basis points to 4.247%, and the 2-year Treasury yield traded more than 6 basis points lower at 3.979%.
One basis point is equal to 0.01%. Yields and prices move in opposite directions.
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WATCH HEREThe Federal Open Market Committee kept its key borrowing rate targeted in a range between 4.25%-4.50%, where it has been since December, but still indicated that reductions will likely occur later this year. Markets were pricing in virtually no chance of a move at this week's two-day policy meeting.
Along with the rate decision, the FOMC also noted in its post-meeting statement that "uncertainty around the economic outlook has increased." Officials updated their interest rate and economic projections for 2025 through 2027 and reduced the pace at which the central bank is allowing bond holdings to run off its balance sheet.
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SIGN UP "Revisions to FOMC members projections had a somewhat 'stagflationary' feel with forecasts for growth and inflation moving in opposite directions," said Whitney Watson, global co-head and co-choef investment officer of fixed income and liquidity solutions at Goldman Sachs Asset Management. "For the time being, the Fed is in wait and see mode, as it monitors whether the recent growth slowdown develops into something more serious."
The Fed's latest move comes as U.S. President Donald Trump's trade policies, particularly his tariffs on global trade partners, have kept investors on alert and raised alarm about the possibility of a recession.
