Today, March 18, 2026, the Federal Reserve (Fed) decided to keep interest rates unchanged, leaving them in the range of 3.50% - 3.75%. This is the second consecutive pause so far this year.
The decision was not unanimous (11-1), as Governor Stephen Miran voted in favor of a 25 basis point cut. Here are the key points of the day:
1. Projections and the "Dot Plot"
• Cuts on the horizon: Despite the pause, the "dot plot" continues to suggest that there will be a rate cut before the end of 2026.
• Rising inflation: The Fed revised its inflation (PCE) forecast for the end of the year upward, from 2.4% to 2.7%.
• Growth: The GDP forecast for 2026 was raised to 2.4% (up from the previous 2.3%), showing an economy that remains resilient.
2. The "Uncertainty Factor": Iran and Oil
Jerome Powell emphasized that geopolitical tensions in the Middle East are the main focus of uncertainty. The recent rise in energy prices due to the conflict with Iran has complicated the Fed's roadmap, forcing them to be more cautious to avoid a resurgence of inflation.
3. Market Reaction
• Wall Street: The major indices closed in red. The Dow Jones fell by 1.63% and the Nasdaq by 1.46%, reacting negatively to the prospect of more persistent inflation and the lack of clarity on when the first cut will come.
• Additional data: Today, the Producer Price Index (PPI) for February was also released, which rose by 0.7%, confirming that supply chain pressures remain present even before fully noticing the total impact of the current energy conflict.