The Fed keeps rates steady as inflation stabilizes and geopolitics pressure markets

The Federal Reserve Board he kept interest unchanged, keeping the federal funds rate at 3.5% to 3.75% as markets became cautious ahead of the election. Attention now goes to Chair Jerome Powell for guidance on how policymakers view the path of inflation and growth for the rest of the year.

In a words released on March 18, the Fed said that GDP growth in the US will slow slightly from 2.4% in 2026 to 2.1% in 2028, while the unemployment rate will gradually decrease from 4.4% to 4.2%. PCE inflation is expected to decline from 2.7% to 2.0%, while average inflation is expected to remain close to 2%.

The federal funds rate is expected to be around 3.1%, with policymakers expecting two cuts over the next few years, including one in 2026.

The central bank also said it had increased economic uncertainty, including potential developments in the Middle East.

The decision, supported by all members except Stephen Miran, who favored a rate cut of 0.25, comes as the rate of inflation surprised. February inflation rose 0.7% on a monthly basis, more than double the forecast of 0.3%. For the year, the headline PPI grew 3.4%, above expectations of 3% and 2.9% before reaching. Core prices, which exclude food and energy, rose 3.9% for the year, also beating estimates.

At the same time, the escalation of tensions between the US and Iran has added further uncertainty, fueling concerns that inflation may remain persistent. The integration of high-temperature data and global risk has led to a conceptualization of risk.

Crypto markets fell after the release. Bitcoin fell below $72,000, while major markets also weakened. The S&P 500 and Nasdaq each fell about 0.7% on the day, reflecting a cautious response to the economy and the Fed’s stance. Price action has not settled after the decision, meaning investors are waiting for more clear signals from Powell.