US Fed Holds Rates Steady at 3.50%-3.75%, Inflation Risks Loom

The US Federal Reserve kept its benchmark Federal Funds Rate unchanged at 3.50%-3.75% during its March 2026 policy meeting, signaling caution amid persistent inflation pressures.

The decision, broadly consistent with January’s stance, leaned slightly firmer as policymakers acknowledged geopolitical uncertainties stemming from Middle East developments. Chair Jerome Powell emphasized that further rate cuts hinge on clearer evidence of disinflation, noting that inflation progress remains uneven.

Rates steady

The Fed’s updated Summary of Economic Projections showed higher inflation expectations for 2026, with PCE inflation revised to 2.6%-3.1% and core PCE to 2.5%-2.8%.

Despite this, real GDP growth is projected to hold at 2.2%-2.5%, while unemployment remains stable at 4.3%-4.5%. The policy path suggests rates could ease to 3.1%-3.6% in 2026 and 2.9%-3.6% in 2027, but only if inflation trends improve. Analysts expect the Fed to stay on hold in the near term, with possible 25bp cuts in June and September, though the bar for easing has risen.

Business News