March 2026 FOMC Update

The Federal Reserve (Fed) left its target policy rate unchanged today, maintaining a range of 3.50%–3.75%. The decision passed with an 11-1 vote, with Stephen Miran as the lone dissenter in favor of a 25 basis point cut.

Current conditions

Economic activity is expanding at a solid pace. However, the outlook for the U.S. economy remains uncertain due to developments in the Middle East, and near-term inflation expectations have risen as a result of energy disruptions. Longer-term inflation expectations, however, have remained consistent and within the Fed’s 2% goal. Job growth has remained slow, and the unemployment rate has seen little recent change. The statement referenced the importance of both sides of the Fed’s mandate.

Forward guidance

The Summary of Economic Projections (SEP) was updated at today’s meeting. Members raised their median 2026 GDP projection to 2.4% from 2.3%. They also increased the Core PCE projection for 2026 to 2.7% from 2.4%, although Chair Powell noted that it is standard practice to look through oil shocks during his press conference. The median dot plot for year-end 2026 remains unchanged from the December meeting, still indicating one 25 basis point cut to a target rate of 3.375%.

Policy/Market reaction

Bond yields were drifting higher prior to the meeting and have continued to rise following the announcement. Equities were weaker before the release and have declined further since the press conference. Powell has not made any decision regarding how long he will remain at the Fed but has stated he has no intention of leaving until after the DOJ investigation is fully concluded. If no Fed chair is confirmed by the end of his term, he would serve as Chair Pro Tem, as legally mandated.