The US Federal Reserve meeting begins on March 18, with the outcome due on March 19. The Federal Open Market Committee (FOMC) is deliberating on policy rates and its stance at a time of heightened market volatility, with the risks of rising inflation and slowing growth looming due to US President Donald Trump’s tariff policies.

While the market expects the US central bank to keep interest rates unchanged, all eyes will be on Fed Chair Jerome Powell’s projections on inflation and growth.

“The FOMC is anticipated to maintain the federal funds rate at its current range of 4.25 per cent to 4.50 per cent. This decision aligns with the Fed’s cautious approach amid economic uncertainties, particularly those arising from recent tariff policies,” said Narinder Wadhwa, Managing Director & CEO of SKI Capital Services.

Can the US Fed shift its policy stance?

Experts do not expect the Fed to change its policy stance at this juncture as the impact of the Trump administration’s policies will unfold in the coming months.

Earlier in March, speaking at a research conference in New York, Powell highlighted the policy changes in areas, including trade, taxes, government spending, immigration and regulation, initiated by the Trump administration and said that the “net effect” of those changes would affect the US economy and the interest rate trajectory of the US Fed.

Madhavi Arora, Lead Economist at Emkay Global Financial Services, underscored that the Fed has so far displayed little concern about the economy or the need for imminent rate cuts.

However, Arora said that unpleasant macro dynamics would likely create a range of policy complications for US monetary and fiscal policy.

Experts say the market is not expecting any changes in rates or stance and is instead more focused on the central bank’s economic projections.

“Markets will closely analyse the quarterly Summary of Economic Projections (SEP), which the Fed will release along with policy decisions. The SEP will offer insights into members’ expectations for GDP growth, unemployment, and inflation,” Wadhwa underscored.

How will the US Fed’s policy decision impact the Indian stock market?

According to Vijay Bharadia, Managing Partner & CIO of Wallfort PMS, while a steady US interest rate environment often encourages capital flows into emerging markets like India, the impact is nuanced.

Bharadia underscored that a weaker dollar could support foreign inflows into Indian equities, but concerns over a potential US slowdown may temper risk appetite.

Bharadia said evolving trade policies—particularly the renewed focus on tariffs under Trump’s economic vision—add another layer of complexity.

Bharadia said that for India, sectors with significant US exposure, such as IT and steel, may face headwinds, while domestic consumption-driven industries could be relatively insulated.

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