- No change was expected
- Fed funds rate at 3.50-3.75%, unchanged
More headlines:
Fed says implications of developments in Middle East for U.S. economy are uncertain
Uncertainty about the economic outlook remains elevated
Available indicators suggest that economic activity has been expanding at "solid pace"
Job gains have remained low and unemployment rate has been little changed in recent months
Inflation remains somewhat elevated
Fed says it is "attentive" to risks to both sides of dual mandate
Vote in favor of policy was 11-1, with Governor Miran dissenting in favor of a 25-basis-point rate cut
Fed officials' median view of Fed funds rate at end-2027 3.1% (Prev 3.1%)
Fed officials' median view of Fed funds rate at end-2026 3.4% (Prev 3.4%)
Fed officials' median view of Fed funds rate at end-2028 3.1% (Prev 3.1%)
Fed officials' median view of Fed funds rate in longer run 3.1% (Prev 3.0%)
Fed projections imply 25 bps of rate cuts in 2026, 25 bps of cuts in 2027
Fed projections show seven policymakers saw no rate cut in 2026, one sees rates higher in 2027
Fed policymakers see 4.4% unemployment rate at end of 2026 versus 4.4% in December projections
Fed policymakers see end-2026 PCE inflation at 2.7% versus 2.4% in December; core seen at 2.7% versus 2.5%
Fed policymakers see 2.4% GDP growth in 2026 versus 2.3% in December, see longer-run growth at 2.0% vs 1.8% in December
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.
On the dot plot, 12 of 19 meeting participants penciled in at least one cut this year, the same as in December. What changed in March is more at the margins — the dovish tail got trimmed. The lone dot near 2.0% in December disappeared, and the dots that had been sitting around 2.5%–2.75% moved up closer to 3.0%–3.125%. The median held at 3.4%, but the distribution tightened and shifted modestly higher around it.
For 2027, the story is similar. The core cluster stayed around 3.0%–3.125%, but the lower outliers were pulled up and a couple of dots appeared near 4.0% at the top. The range narrowed, reflecting a committee that has converged toward a slower, shallower easing path rather than one that fundamentally changed its central view.
The immediate reaction in Fed funds futures were modest but dovish. December Fed funds futures pricing is at -22.5 bps vs 20.5 bps before the decision.
