Overview
- Policymakers left the federal funds target at 3.50%–3.75% at the March 17–18 meeting.
- Futures now price roughly a 27% chance of a 2026 hike versus about a 9% chance of at least one cut, according to CME FedWatch.
- Energy costs climbed after U.S. action against Iran, lifting headline inflation pressures as the Fed watches for pass-through to core prices.
- Chair Jerome Powell highlighted risks to both inflation and employment, and analysts note oil shocks are relatively unresponsive to interest-rate moves.
- The Fed’s new projections point to a median of one 25 bp cut in 2026 with slightly higher inflation and growth, while an administration probe into Fed renovations introduces leadership uncertainty as Powell’s term ends May 15 and he could serve as acting chair if no successor is confirmed.