P.M. Edition for Mar. 19. The Federal Reserve held interest rates steady, as expected, continuing its wait-and-see posture. WSJ chief economics commentator Greg Ip joins to discuss the central bank’s outlook for the quarter. Plus, the Journal’s chief China correspondent Lingling Wei explains why Chinese leader Xi Jinping is angry with Hong Kong-based CK Hutchison’s deal to sell ports on either side of the Panama Canal to U.S. investors. And Ukrainian President Volodymyr Zelensky agreed to a partial cease-fire with Russia on a phone call with President Trump. Alex Ossola hosts. Building Influence: China’s Global Infrastructure Bet Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: Why did the Federal Reserve hold interest rates steady?
Chapter 2: What are the implications of Xi Jinping's Panama Canal port deal?
The Fed holds rates steady as it dims the economic outlook. Plus, Chinese leader Xi Jinping is angry about a deal for the control of two Panama Canal ports that Trump counts as a win.
Xi originally planned to use the issues over Chinese interests in the Panama Canal as a bargaining chip in negotiations with the Trump administration. But the deal basically pulled rock out from under him even before any negotiations started.
And Columbia University is getting close to yielding to President Trump's demands in an effort to regain its federal funding. It's Wednesday, March 19th. I'm Alex Zosula for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today.
The Federal Reserve extended its wait-and-see posture on interest rates while marking up its forecast for inflation and revising down its outlook for growth this year. At its policy meeting today, the central bank held steady its benchmark federal funds rate at around 4.3 percent as the Fed assesses how policy changes by the Trump administration could reshape the economic outlook.
In his comments after the meeting, Fed Chair Jerome Powell said that progress on inflation could be delayed this year.
Growth looks like it's maybe moderating a bit, consumer spending moderating a bit, but still at a solid pace. Unemployment's 4.1%. Job creation most recently has been at a healthy level. Inflation has started to move up now, we think partly in response to tariffs, and there may be a delay in further progress over the course of this year. So that's the hard data. Overall, it's a solid picture.
The Fed still expects two rate cuts in 2025, though Powell said that the bank is in no rush to cut interest rates as it waits for more certainty on the path of the economy. I'm joined now by WSJ chief economics commentator Greg Ip. So, Greg, what did we get out of Powell's comments?
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Chapter 3: What insights did Greg Ip share about the Fed's economic outlook?
The main takeaway from what Chair Powell had to say is that not a lot in the economic outlook with respect to either economic growth or inflation has changed, notwithstanding the fact that the headlines and the conversation have been jam-packed. Thank you very much.
I'm particularly interested in the quarterly projection that the Fed announced today. This was the first one for this year and the first one under President Trump. What does it show about what's to come?
Well, they lowered their economic growth projection for this year to 1.7% from 2.1%. Now, that's obviously in the wrong direction, but I'm not sure how much to read into that because a lot of that might just reflect some of the strange weakness we've seen in the quarter so far. They also raised their expectations for inflation this year a little bit by about a quarter of a percentage point.
And Chair Powell in his press conference did indicate that that reflected some expected pass-through to consumer prices from higher tariffs. But if you look at the projections for the following year, those haven't really changed.
So effectively, what they're saying is we think tariffs will generate this one-off bump up in the inflation rate, but not a persistent increase in inflation, which is the kind of thing that they would worry about and might have to respond to by raising interest rates.
The press corps obviously wanted to get him to talk expansively about all the stuff Trump's been doing on tariffs and on spending cuts and so on. And Powell, who tries very hard to maintain the apolitical, nonpartisan reputation and mission of the Fed, he wasn't helping out on that front at all. He was batting down those questions left, right, and center.
That was WSJ Chief Economics Commentator Greg Ip. Thank you, Greg.
Thanks for having me.
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Chapter 4: How did the Fed's decision affect the stock market today?
The Fed's forecast for rate cuts wasn't as hawkish as many investors feared, which added fuel to today's stock market rally. Major U.S. indexes rose. The Dow went up about 0.9 percent, the S&P 500 ticked about 1.1 percent higher, and the Nasdaq advanced about 1.4 percent.
Reporting its third quarter earnings today, General Mills updated its guidance for organic sales, saying it expects they'll fall by one and a half to two percent this fiscal year. The company, which makes snacks and other foods like Cheerios cereal and Pillsbury dough, said that results for its fiscal third quarter, which ended February 23rd, were below internal expectations.
Chapter 5: What do General Mills' earnings reveal about consumer trends?
I'm joined now by Jesse Newman, who covers food for the journal. So, Jesse, what do General Mills earnings tell us about the dynamics at play in the U.S. market?
The biggest thing that they show us is that consumers are pulling back on their snack purchases. And this isn't the first time we've seen it. Big food companies have been saying for a while now that they are seeing a slowdown in snacks. And General Mills really reiterated this today.
And they talked a lot about consumers and how consumer sentiment just really hasn't improved the way they thought it would at the beginning of their fiscal year. So at the beginning of the fiscal year, they thought, you know, consumer sentiment was going to get a lot better. They said that hasn't happened. And in fact, shoppers are still very, very focused on value.
Chapter 6: How is economic uncertainty affecting food companies?
And so it's up to them to create that value for consumers.
The company said that its forecast doesn't incorporate any new tariffs. What does that show about how economic uncertainty is affecting companies' ability to plan ahead?
Food companies in general are, just like all businesses across the U.S., really just trying to ride the wave of this uncertainty. It's hard to plan when you don't know exactly what the future is going to bring. So they don't know enough to price anything in at this point, but there's just a lot of uncertainty out there when it comes to the broader economic conditions.
That was WSJ reporter Jessi Newman. Thank you, Jessi.
Thank you.
We're exclusively reporting that Columbia University is getting close to yielding to President Trump's demands in negotiations to restore $400 million in federal funding. That's according to people close to the discussions. The government canceled the grants and contracts over campus anti-Semitism allegations earlier this month.
It made nine far-reaching demands, which include banning masks, empowering campus police, and putting the school's Department of Middle East, South Asian, and African Studies under academic receivership, which means it would no longer be controlled by the faculty. Columbia has until tomorrow to respond to the administration.
Agreeing to the demands doesn't guarantee the federal funds will come back. Discussions on the board of trustees are still fluid with sticking points and could turn in a different direction before tomorrow. Congress is working on a budget and cuts to Medicaid are on the table. The program is mainly for low-income Americans, but deep cuts could affect state budgets and health care more broadly.
What questions do you have? Send a voice memo to WNPOD at WSJ.com or leave a voicemail with your name and location at 212-416-4328. We might use it on the show. Coming up, why China's leader Xi Jinping is unhappy with the Hong Kong company's plan to sell Panama Canal ports to a U.S.-led group. That's after the break. Earlier this month, U.S.
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