WASHINGTON, March 18, 2026, 10:38 EDT
Fed officials look set to hold rates steady Wednesday, with rising oil prices fueled by conflict with Iran and recent stronger inflation data complicating prospects for a rate cut this year. Brent crude has pushed past $108 a barrel—an uptick that could make policymakers more cautious about signaling future easing, a shift from their tone just weeks back.
The focus shifts from the hold to what the Fed’s updated projections reveal about divisions over the next step. March 17-18 brings one of the projection meetings, with the policy announcement slated for 2 p.m. EDT. Chair Jerome Powell heads to the podium at 2:30 p.m.
The federal funds rate is parked at 3.5%-3.75% after the Fed kept it unchanged in January, citing still-sticky inflation and modest job growth. Two members broke ranks, pushing unsuccessfully for a quarter-point cut right then—a sign the committee wasn’t unified even before the recent surge in energy prices.
Officials got no breathing room from the latest numbers. Consumer prices increased 0.3% in February, up 2.4% from last year; strip out food and energy, and the gain was 2.5%. Then on Wednesday, the Labor Department reported producer prices jumped 0.7% for the month and 3.4% year-over-year—the sharpest annual rise going back to February 2025.
Jobs are sliding. Payrolls dropped by 92,000 in February, with unemployment steady at 4.4%. On Wednesday, AAA pegged the national average for regular gas at $3.842 a gallon, a jump from $2.923 just a month earlier.
Diane Swonk, chief economist at KPMG, pointed out that the Fed is making its forecasts “under a cloud of uncertainty,” anticipating policymakers will cut their growth outlook and bump up projections for both inflation and unemployment. Former St. Louis Fed President James Bullard, for his part, took a more hawkish stance, warning the committee might have to get “a little tougher on inflation.” Traders now have their eyes on the dot plot—the Fed’s own chart of rate projections—to gauge whether the first rate cut is being pushed back to December. Reuters
But the real danger? The Fed’s signals could get even murkier. BNP Paribas flagged a “symmetric policy bias”—basically, markets see about equal odds of a hike or a cut. Former Fed economist Claudia Sahm went further, arguing the war’s thrown things into such uncertainty that the central bank might be better off dropping its quarterly forecasts for now. Reuters
Central banks outside the U.S. are also adjusting their stance on rates. The Bank of Canada kept its benchmark rate steady at 2.25% on Wednesday, warning it would hike if rising energy prices risk locking in inflation. Over in Australia, policymakers moved a day earlier, opting for a rate increase—both moves highlighting just how much the oil shock is shaking up policy discussions far from Washington.
