- No change was expected
- Fed funds rate at 3.50-3.75%, unchanged
The Federal Reserve held its key overnight interest rate unchanged in the 3.50%–3.75% range at the conclusion of its two-day March meeting on March 18, as widely expected. The vote was 11-1, with Governor Miran the lone dissenter, favoring a 25-basis-point cut. The statement noted that the implications of developments in the Middle East for the U.S. economy remain uncertain.
In its policy language, the Fed said economic activity had been expanding at a “solid pace,” while job gains remained low and the unemployment rate had been little changed in recent months. Inflation was described as “somewhat elevated,” and the committee said it remained “attentive” to risks on both sides of its dual mandate. The Fed also flagged that uncertainty about the economic outlook remained elevated — a nod to the ongoing conflict in Iran and its ripple effects through energy markets.
The updated Summary of Economic Projections showed officials slightly upgrading their 2026 GDP growth forecast to 2.4% from 2.3% in December, while raising the longer-run growth estimate to 2.0% from 1.8%. On inflation, policymakers saw end-of-2026 PCE at 2.7%, up from 2.4% in December, with core PCE also rising to 2.7% from 2.5%. The unemployment rate projection held steady at 4.4% for year-end 2026.
The dot plot revealed a more hawkish tilt. Seven policymakers saw no rate cut at all in 2026, with only one seeing rates higher in 2027. The median view placed the fed funds rate at 3.4% at end-2026 — unchanged from December — implying just 25 basis points of cuts this year, with another 25 basis points in 2027. The longer-run neutral rate estimate edged up to 3.1% from 3.0%. With Chair Powell stepping down in May and oil prices remaining elevated, the Fed appeared content to stay patient, keeping its options open while the geopolitical and inflation picture clarified.
