US STOCKS-Wall Street higher after Fed keeps rates unchanged

Updates with Federal Reserve policy statement

By Chuck Mikolajczak

NEW YORK, March 19 (Reuters) - U.S. stocks added to gains on Wednesday after the Federal Reserve kept rates unchanged, as the central bank and investors continue to assess how President Donald Trump's tariff policies might affect economic growth.

The central bank kept its benchmark overnight interest rate unchanged in the 4.25%-4.50% range, and indicated that two quarter-point interest-rate cuts were likely later this year, the same median forecast as three months ago. The Fed also forecast slower economic growth and higher inflation.

There was substantial disagreement among policymakers about the appropriate path of policy, pointing to uncertainty among members over how to handle the effects of the Trump administration's policies.

The Fed also said it would reduce the pace of the drawdown of its still-massive balance sheet, as it faces challenges in assessing market liquidity during an ongoing impasse in the U.S. Congress over lifting the government’s borrowing limit.

"Given growing worries around tariffs and how they could affect U.S. growth and inflation," Matthias Scheiber, head of the multi-asset solutions team at Allspring Global Investments in London said the Fed "took a widely expected 'wait and see' approach on rates."

Scheiber added: "For 2025, the interest rate market currently expects the Fed will cut rates to around 3.75% by year-end. A lot will depend on how the inflation-versus-growth trade-off develops—growth may continue weakening, and the Fed may need to cut rates more forcefully than expected."

Traders still see the Fed lowering borrowing costs by at least two 25-basis point cuts by December, with a 62.2% chance for a cut of at least 25 basis points in June, according to data compiled by LSEG.

Investors will now look to comments from Fed Chair Jerome Powell for further guidance on monetary policy.

The Dow Jones Industrial Average .DJI rose 228.44 points, or 0.55%, to 41,808.20, the S&P 500 .SPX gained 46.76 points, or 0.82%, to 5,660.52 and the Nasdaq Composite .IXIC gained 213.23 points, or 1.18%, to 17,715.71.

Advancing issues outnumbered decliners for a 1.63-to-1 ratio on the NYSE and a 1.66-to-1 ratio on the Nasdaq.

The S&P 500 posted four new 52-week highs and one new low, while the Nasdaq Composite recorded 25 new highs and 103 new lows.

(Reporting by Chuck Mikolajczak; Editing by David Gregorio)

((charles.mikolajczak@tr.com; @chuckmik.bsky.social))