Fed Leaves Rates Steady, Still Expects to Cut in 2026

2026-03-18 18:01 By Joana Taborda 1 min. read

The Fed left the federal funds rate steady at the 3.5%–3.75% target range for a 2nd consecutive meeting in March 2026, in line with expectations.

Policymakers noted that economic activity has been expanding at a solid pace, job gains have remained low while inflation remains somewhat elevated.

The implications of the war with Iran are uncertain.

Against this backdrop, policymakers still expect one reduction in the fed funds rate this year and another in 2027, the same as in the December projections, though the timing remains unclear.

The Fed also revised its GDP growth forecasts higher for both 2026 (2.4% vs 2.3% seen in December) and 2027 (2.3% vs 2%).

Unemployment is projected at 4.4% for 2026, unchanged from December and 4.3% for 2027 (revised up from 4.2%).

Both PCE and Core PCE inflation are now expected to be higher this year, at 2.7% each, compared with the December projections of 2.4% and 2.5%, respectively.

For 2027, both measures have been revised up to 2.2% from 2.1%.



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