Overview
- The Fed left the policy rate at 3.50%–3.75% at its March 17–18 meeting and lifted its 2026 PCE inflation projection to 2.7%, while the median dot plot still points to one 25-basis-point cut next year.
- FedWatch data show traders now assign roughly a 27% probability to a 2026 rate hike and far lower odds to cuts, reflecting a sharp repricing since the Iran conflict escalated.
- Rising oil prices are expected to boost headline CPI and PCE, with analysts emphasizing that any sustained pass-through into core inflation would be pivotal for future policy.
- Chair Jerome Powell signaled any cut is conditional on clearer disinflation progress, and Fidelity cautioned that a leadership transition could inject additional policy uncertainty.
- Global caution has grown as the Bank of England and European Central Bank also kept rates unchanged and markets pulled back expectations for further easing.