The Federal Reserve kept interest rates stable; the dot plot indicates only one rate cut remains this year.
2026-03-19 10:17:23
Amidst escalating tensions in the Iran nuclear deal, soaring oil prices, rising inflation expectations, and a weak job market, the Federal Reserve concluded its two-day Federal Open Market Committee (FOMC) meeting on March 19, deciding to maintain the federal funds rate at 3.50%-3.75%. This marks the second consecutive day that the rate has remained unchanged, following a pause in rate cuts in January.
Federal Reserve Chairman Jerome Powell addressed market concerns comprehensively at the post-meeting press conference, emphasizing that the current economic environment is fraught with uncertainty and that the Fed must remain highly cautious. The Summary of Economic Projections (SEP) and the dot plot released at the meeting only saw mildly dovish adjustments, with only one rate cut expected for the year , highlighting the Fed's difficult balance between the dual challenges of inflation and growth.
Market expectations for a rate cut at this meeting have fallen to near zero, with the CME FedWatch Tool indicating a greater than 99% probability of keeping rates unchanged in March. The Fed made only minor adjustments in its post-meeting statement, with economic projections and interest rate guidance largely maintaining the tone of December. Powell used the word "uncertain" more than six times during the press conference, emphasizing the significant uncertainty surrounding the economic outlook due to the Iran war.
During the press conference, Powell repeatedly emphasized that predicting the future is virtually impossible at present. Facing multiple rounds of questions about the impact of oil prices, he repeatedly stated, "What I really want to emphasize is that nobody knows." He added, "The economic impact could be bigger or smaller, even far greater or far less than expected; we just don't know."
The war with Iran has effectively closed the Strait of Hormuz, causing the largest disruption to global oil supplies in history. Brent crude oil prices have broken through $100 per barrel, and inflation expectations have risen significantly. The Federal Reserve must simultaneously address the dual pressures of rising energy-driven inflation and slowing economic growth. Powell stated that the Fed will closely monitor developments and await further clearer signals.
This dot plot shows that most officials still expect only one 25-basis-point rate cut in 2026 , while the path in 2027 is significantly divergent: one official expects a rate hike, three expect it to remain unchanged, four expect another cut, six expect two, three expect three, one expects four, and Stephen Miran expects five. The overall divergence is a "maze," highlighting the serious division within the committee regarding the future path.
This meeting was Powell's penultimate policy meeting as chairman, and his remarks were closely watched. Powell reiterated that he had not yet decided whether to remain on the board after his term as chairman ends in May. He emphasized that he would not leave until the federal investigation against him was concluded, and would remain as interim chairman until his successor, Kevin Warsh, nominated by Trump, was confirmed by the Senate.
North Carolina Republican Senator Thom Tillis has publicly pledged to block Walsh's nomination from proceeding before the Senate Banking Committee until the investigation into Powell is fully concluded. This means Powell could remain in office beyond May.
President Trump, who has long pressured the Federal Reserve to cut interest rates, once again launched a fierce attack on Powell on Monday. He stated, "Where is Fed Chairman Powell today? He should cut rates immediately, not wait until the next meeting!" However, Trump's own Justice Department is hindering Warsh's succession process due to an investigation into the Fed headquarters renovation project.
Overall , the energy shock triggered by the war with Iran and the rebound in inflation expectations forced the Federal Reserve to maintain a cautious stance at this week's policy meeting, where it had to make a difficult trade-off between the upside risks to inflation and the slowdown in economic growth.
Federal Reserve Chairman Jerome Powell addressed market concerns comprehensively at the post-meeting press conference, emphasizing that the current economic environment is fraught with uncertainty and that the Fed must remain highly cautious. The Summary of Economic Projections (SEP) and the dot plot released at the meeting only saw mildly dovish adjustments, with only one rate cut expected for the year , highlighting the Fed's difficult balance between the dual challenges of inflation and growth.
Uncertainty dominates: The Fed has virtually no room for maneuver.
Market expectations for a rate cut at this meeting have fallen to near zero, with the CME FedWatch Tool indicating a greater than 99% probability of keeping rates unchanged in March. The Fed made only minor adjustments in its post-meeting statement, with economic projections and interest rate guidance largely maintaining the tone of December. Powell used the word "uncertain" more than six times during the press conference, emphasizing the significant uncertainty surrounding the economic outlook due to the Iran war.
The impact of war is the biggest variable: Powell bluntly states that "no one knows" the consequences.
During the press conference, Powell repeatedly emphasized that predicting the future is virtually impossible at present. Facing multiple rounds of questions about the impact of oil prices, he repeatedly stated, "What I really want to emphasize is that nobody knows." He added, "The economic impact could be bigger or smaller, even far greater or far less than expected; we just don't know."
The war with Iran has effectively closed the Strait of Hormuz, causing the largest disruption to global oil supplies in history. Brent crude oil prices have broken through $100 per barrel, and inflation expectations have risen significantly. The Federal Reserve must simultaneously address the dual pressures of rising energy-driven inflation and slowing economic growth. Powell stated that the Fed will closely monitor developments and await further clearer signals.
The dot plot indicates only one more rate cut is needed, with significant divergence expected in 2027.
This dot plot shows that most officials still expect only one 25-basis-point rate cut in 2026 , while the path in 2027 is significantly divergent: one official expects a rate hike, three expect it to remain unchanged, four expect another cut, six expect two, three expect three, one expects four, and Stephen Miran expects five. The overall divergence is a "maze," highlighting the serious division within the committee regarding the future path.
Powell's term countdown: Remaining in office until the investigation concludes, Walsh's succession blocked.
This meeting was Powell's penultimate policy meeting as chairman, and his remarks were closely watched. Powell reiterated that he had not yet decided whether to remain on the board after his term as chairman ends in May. He emphasized that he would not leave until the federal investigation against him was concluded, and would remain as interim chairman until his successor, Kevin Warsh, nominated by Trump, was confirmed by the Senate.
North Carolina Republican Senator Thom Tillis has publicly pledged to block Walsh's nomination from proceeding before the Senate Banking Committee until the investigation into Powell is fully concluded. This means Powell could remain in office beyond May.
Political pressure continues: Trump again publicly attacks Powell
President Trump, who has long pressured the Federal Reserve to cut interest rates, once again launched a fierce attack on Powell on Monday. He stated, "Where is Fed Chairman Powell today? He should cut rates immediately, not wait until the next meeting!" However, Trump's own Justice Department is hindering Warsh's succession process due to an investigation into the Fed headquarters renovation project.
Overall , the energy shock triggered by the war with Iran and the rebound in inflation expectations forced the Federal Reserve to maintain a cautious stance at this week's policy meeting, where it had to make a difficult trade-off between the upside risks to inflation and the slowdown in economic growth.
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