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The Federal Reserve kept interest rates unchanged in a range of 4.25%-4.5% at its March meeting on Wednesday and signaled it maintain its previously expected pace of cuts.

Fed officials see the fed funds rate falling to 3.9% this year, on par with its previous December projection.

The central bank also raised its respective projections for year-end PCE inflation and the unemployment rate. At the same time, it lowered its economic growth forecast, noting in the policy statement, “Uncertainty around the economic outlook has increased.”

15 officials predict a rate cut this year, with two officials seeing a decrease of more than 0.50%, while four officials see no change, signaling a more hawkish stance compared to December. This month’s expectations for 2025 rates were also less widely distributed compared to the previous projections.

The updated forecasts suggest the Federal Reserve will continue to take a more cautious approach as FOMC leaders attempt to understand the administration’s shifting trade narrative and other policy unknowns, including recent efforts to cut government jobs from Elon Musk’s Department of Government Efficiency (DOGE).

At the same time, fears over stagflation, a bleak economic scenario in which growth stalls, inflation persists, and unemployment rises, have escalated in recent weeks — and Wednesday’s projections underscored that sentiment.

The SEP indicated the Federal Reserve sees core inflation hitting 2.7% next year, higher than December’s projection of 2.5%, before cooling to 2.2% in 2026 and 2.0% in 2027.

Similarly, the Fed raised its forecast for the unemployment rate to 4.4% this year, higher than its previous forecast of 4.3%. Unemployment is expected to tick down to 4.3% in 2026 and remain at that level through 2027.

The Fed also downgraded its previous forecast for US economic growth, with the economy expected to grow at an annualized pace of 1.7% this year before reaching 1.8% growth in 2026 and 2027.

Read more here.

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By Jamie McGeever

ORLANDO, Florida (Reuters) – TRADING DAY

Another wild one on Wall Street as Fed, BOJ decisions loom.

U.S. stocks fell on Tuesday, buckling under the weight of worry building on multiple fronts from geopolitical tensions to the outlook for Big Tech, from economic uncertainty to deepening unease around President Donald Trump’s trade wars.

The selloff is a reminder, as if one were needed, of how fragile market sentiment is right now – visibility on the economic, policy, and geopolitical outlooks is minimal. No wonder investors are jittery.

Treasuries failed to catch much of a safe-haven bid, perhaps because investors wanted to keep positioning light ahead of the Fed’s policy decision on Wednesday. But gold did, leaping 1% to a new high above $3,000 an ounce.

Wall Street’s losses on Wednesday, coupled with Europe’s rally after Germany’s parliament approved plans for a massive spending surge, highlight the degree of America’s equity underperformance against the ‘Rest of the World’.

It’s a trend that seems more likely to continue than reverse. More on that below, but first, here are how world markets stacked up on Tuesday.

Today’s Key Market Moves.

* Wall Street’s main three indices all fall, with the Dowshedding 0.6%, the S&P 500 losing 1%, and the Nasdaq sliding1.7%. * Eight of the 10 sectors in the S&P 500 index close in thered. Consumer cyclicals and tech lead the way, down 1.8% and1.7%, respectively. * Shares in Google parent company Alphabet slide 2.2% to asix-month low after agreeing to buy Wiz for $32 billion – itsbiggest ever deal – as it doubles down on cybersecurity. * Tesla shares slump 5.3%, bringing the decline since theDecember peak to more than 50%. That’s around $800 billionmarket cap gone in three months. * Gold rises for a fifth session out of the last six, upmore than 1% to a fresh high of $3,038/oz. * Oil’s decline in the face of rising tensions in the MiddleEast underscores investors’ broader worries over demand. WTIfutures close 1% lower, Brent down 0.7%. * China’s spot yuan posts its strongest close since Novemberat 7.2216 per dollar. This tightens the spread over the PBOCfixing to less than 5 bps, the narrowest since November. * The dollar trades in a tight range and Treasury yieldsslip no more than 2 bps across the curve, suggesting FX and bondinvestors are sitting tight before the BOJ and Fed tomorrow.

U.S. President Donald Trump and Russian President Vladimir Putin on Tuesday discussed a potential 30-day ceasefire in the Russia-Ukraine war. But while Moscow agreed to stop attacking Ukraine’s energy infrastructure, it did not agree to a blanket 30-day ceasefire.

This helped keep the selling pressure bearing down on Wall Street, and maintain the bid under gold and the Swiss franc.

Barring unforeseen developments on the geopolitical or trade war fronts – a brave assumption these days – investors’ attention now switches to the big central banks. First up on Wednesday is the Bank of Japan, then the Federal Reserve.

It’s probably no surprise, given the volatile global climate, that hawkish expectations for the BOJ are fading. No one was expecting another rate hike on Wednesday anyway, but rates markets are not fully pricing in the next 25 bps hike until September. And that’s it for the year.

This could explain why the yen has eased off lately, failing to get much support from safe-haven demand or surging Japanese bond yields.

Investors’ attention on the Fed, meanwhile, will be split between policymakers’ new economic projections, what they say about the central bank’s balance sheet rundown, and the signals drawn from Chair Powell’s press conference.

Markets, especially the bond market, could be coiled for a big move, and there are several lines of questioning to Powell that could provide the trigger – tightening financial conditions, Wall Street’s weakness, the impact of Trump’s tariffs on growth and inflation, recession risks, or spiking consumer inflation expectations.

It’s shaping up to be a fascinating day across U.S. and world markets.

Investors RoW back on Wall Street exceptionalism

As the end of the first quarter approaches, world stock markets are in a curious position. They are benefiting from capital flowing out of Wall Street, but they also face major risks if the U.S. selloff turns into a rout.

As President Donald Trump’s trade war has snuffed out the “U.S. exceptionalism” narrative, a yawning gap has opened between U.S. equities and those in the ‘Rest of the World’.

The selloff abated briefly and the S&P 500 notched its first consecutive daily rises in a month. But Wall Street was back in the red on Tuesday, and U.S. underperformance – the widest in more than 20 years, by some measures – shows little sign of reversing course.

Indeed, history suggests this gap could widen further, although only if the U.S. economy avoids tipping into a serious recession.

CORRECTION THRESHOLD

As the S&P 500 flirted with 10% correction territory last week, ‘RoW’ markets were outperforming by as much as 9 percentage points, the biggest such gap since 2002, according to strategists at Citi.

Historically, when U.S. corrections eclipse the 10% mark but don’t breach the 20% ‘bear market’ threshold, Wall Street underperforms over the entire downturn, Citi noted. In U.S. bear markets and recessions, however, no country or market is immune – growth and asset prices everywhere suffer.

This scenario appears to be unfolding. Most economists agree that U.S. growth will slow this year, but few think it will fall off a cliff. While the Atlanta Fed’s GDPNow model is signaling a 2.1% contraction in Q1, that remains an outlier.

Contrast that with the sudden improvement in Germany’s growth outlook thanks to Berlin’s proposed fiscal bazooka. Beijing also appears ready to do whatever it takes to support China’s economy and markets – call it the ‘Xi put’.

Indeed, the tailwinds for RoW outperformance seem to be building.

CROWDED OUT

The rotation out of Wall Street to the rest of the world has been underway all year. Bank of America’s March fund manager survey shows that allocations to euro zone markets are the highest since 2021, while U.S. allocations plunged at the fastest rate on record.

This might suggest the switch has run its course. But the same survey also showed that the most crowded trade is still ‘long’ the Magnificent Seven shares of America’s biggest tech firms.

And even though U.S. earnings multiples have fallen to the lowest point since September, they remain lofty by historical standards due to Big Tech’s still-rich valuations. Indeed, U.S. stock valuations remain well above those in other developed markets, so this rotation may be far from over.

FINE LINE

“Corrections are healthy, they’re normal,” Treasury Secretary Scott Bessent told ‘Meet The Press’ on Sunday, adding: “I’m not worried about the markets.

Corrections are indeed normal and healthy, occurring roughly once every couple of years with an average decline of 14%. As Mark Riepe at Charles Schwab points out, of the 27 corrections since 1974 including the current one, only six have gone on to become bear markets.

But Bessent’s remarks could also be interpreted as a sign of how relaxed the Trump administration is about the current decline, suggesting they won’t act to prevent a further slide. It’s a risky stance to take at such a delicate juncture for the economy.

And the RoW needs to watch out, because its outperformance will likely only continue if the U.S. doesn’t implode. As Dario Perkins at TS Lombard notes, “Make no mistake – a U.S. recession would bring down the entire world.”

That would quickly wipe out Wall Street’s underperformance, but unfortunately, also a whole lot more.

What could move markets tomorrow?

* U.S. Federal Reserve policy decision, revised economicprojections and Chair Jerome Powell’s press conference * Bank of Japan policy decision and Governor Kazuo Ueda’spress conference * Japan trade (February) * Japan machinery orders (January) * Japan Tankan non-manufacturing index (March) * Bank Indonesia interest rate decision * China’s Tencent earnings (Q4) * Euro zone HICP inflation (February, final) * ECB board member de Guindos speaks in Madrid

If you have more time to read today, here are a few articles I recommend to help you make sense of what happened in markets today.

1. Israeli strikes kill over 400 in Gaza, say Palestinians,ceasefire on brink 2. European shares climb after German lower house passesfiscal reform bill 3. China stocks offer hedge against fading USexceptionalism: Taosha Wang 4. Maybe BoE should ‘cut through the noise’: Mike Dolan 5. Fed watchers see good chance of change in balance sheetdrawdown

I’d love to hear from you, so please reach out to me with comments at . You can also follow me at [@ReutersJamie and @reutersjamie.bsky.social.]

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

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(By Jamie McGeever, editing by Deepa Babington)

(Reuters) -Canadian retailer Alimentation Couche-Tard missed third-quarter revenue estimates on Tuesday, hurt by sluggish demand in its convenience stores and fuel businesses amid rising inflationary pressures.

Consumers facing financial strain have increasingly scaled back on expensive as well as non-essential purchases, prompting growing concern among retailers including Circle-K owner Couche-Tard.

U.S. retail giants such as Walmart and Target warned of a demand slowdown owing to muted spending as they braced for the impact from import tariffs proposed and implemented by President Donald Trump.

Increasing consumer prices and higher interest rates have resulted in low-to-middle income consumers being hesitant about making travel plans, leading to a reduction in fuel consumption, further pressuring demand at companies such as Couche-Tard.

Its same-store road transportation fuel volumes fell 3% in the United States, impacted by unusual winter conditions and lower traffic. It had dipped 0.8% a year ago.

The Canadian company, which has shown an unwavering commitment to buy Japan’s Seven & i Holdings, saw its quarterly revenue rise 6.5% to $20.90 billion from a year ago. Analysts had estimated a quarterly revenue rise of 8% to $21.19 billion, according to data compiled by LSEG.

However, its adjusted net income of $641 million for the quarter ended February 2 beat estimates of $622.3 million, driven by higher road transportation fuel gross margins as well as contributions from acquisitions.

On an adjusted basis, its quarterly profit of 68 cents per share was in line with estimates.

The Quebec-based company, which has been trying to acquire 7-Eleven’s owner since making its initial offer in August, said earlier this month that it could sweeten its $47 billion bid if the Japanese firm cooperates. Couche-Tard also said it remained confident about overcoming antitrust concerns.

A successful deal between these two leading players in the U.S. convenience store market would create a global giant with about 20,000 locations, potentially making it the biggest foreign buyout in Japanese history.

(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Pooja Desai)