Economic Data and Growth

As anticipated, the Federal Open Market Committee maintained its interest rate target range at 3.50%–3.75% at its March meeting. On the other hand, one FOMC member—Stephen Miran—dissented, preferring to lower the target range by 25 basis points. In a change to its previous statement, the FOMC noted that the implications of developments in the Middle East for the U.S. economy are uncertain.

In the press conference following the meeting, Federal Reserve Chairman Jerome Powell noted that economic activity continues to expand at a solid pace, with job gains staying low while inflation remains elevated. Chairman Powell noted that the higher energy prices due to events in the Middle East will push up prices in the near term, but it is too soon to know the scope and duration of the potential effects on the economy. He reaffirmed that the FOMC is well positioned to determine the extent and timing of additional adjustments to its policy stance.

The FOMC’s summary of economic projections, which maps out the Federal Reserve’s expectations for where interest rates may be headed in the future, signaled a somewhat less mixed stance compared to the December summary. Twelve Federal Reserve officials project there will be additional rate cuts across 2026, while seven anticipate no additional rate cuts this year. A majority of the officials who predict a rate cut this year anticipate just one 25-basis-point cut across 2026. Meanwhile, the projections show that officials still expect inflation to remain elevated, averaging 2.7% in 2026, more so than the 2.4% average projected in December. At the same time, the projections show officials expect real GDP to rise slightly more in 2026 than previously anticipated.