WASHINGTON—As expected, the Federal Reserve’s Open Market Committee adjourned after two days of meetings by leaving interest rates unchanged, leaving the door open to a reduction at some point this year.
As a result, the Fed Funds rate range remains 3.5% to 3.75%.
In new quarterly projections, 12 of 19 meeting participants forecast at least one cut this year, which is similar to the forecast made in December, 2025, al though several officials penciled in fewer reductions. One participant indicated they believe there will be a rate hike for next year.
In its postmeeting statement, the Fed said uncertainty from the war in the Middle East has complicated the picture, even as it implied a bias toward continuing to gradually lower rates.
The war has driven gas prices higher, as well as the costs of other goods, which will contribute to higher inflation rates than the Fed’s 2% target rate.
America’s Credit Unions Economist Responds
“The FOMC maintained the target fed funds rate at its current level. The Committee’s inflation projections for 2026 moved up, and its statement notes heightened uncertainty over ‘developments in the Middle East’,” saod Curt Long, chief economist with America’s Credit Unions. “The price stability side of the Fed’s mandate is clearly growing in importance, but not enough to alter the Committee’s projected rate path, which continues to imply a single rate cut in 2026 and another in 2027. With debt service costs adding to households’ overall affordability woes, credit unions are a crucial difference maker, offering the best borrowing rates in the marketplace.”
New Projections
Most Fed officials now expect the CPI measure of inflation to decline to 2.7% by the end of the year, up from a projection of 2.5% as of December.
Fed officials are also dealing with an uncertain job market. As the CU Daily reported earlier, the most recent report from the Bureau of Labor Statistics showed the economy lost 92,000 jobs in February.
Below, the newest Fed dot plot map.
