FOMC meeting, March 17-18, 2026: Fed kept its policy rate unchanged at 3.50–3.75% and maintained its forecast of one rate cut this year.

        At the FOMC meeting on March 17-18, 2026, the Federal Reserve (Fed) voted 11–1 to keep the policy rate steady at 3.50–3.75%, in line with KResearch's prior forecast. The only dissent came from Stephen Miran, who voted for a 0.25% rate cut. Key points for the meeting are as follows:

• The Fed sees heightened uncertainty, stemming from the Middle East conflict, which could delay the decline in US inflation to its 2% target. The Fed has revised up its PCE inflation forecasts for 2026 and 2027 to 2.7% and 2.2%, respectively, from previous estimates of 2.4% and 2.1%.
• Nevertheless, the Fed continues to signal one policy rate cut this year, being contingent on clear evidence of easing inflation. The conflict in the Middle East could pose a challenge to this outlook. The median forecast for the policy interest rate at the end of 2026 remains at 3.4%, unchanged from the December 2025 estimate. However, the balance of the forecast has tilted toward fewer rate cuts, with more committee members suggesting just one cut, as compared with the previous expectation of two.
• The Fed has downgraded its risk assessment of stagflation, viewing it as far below the levels in the 1970s during the Yom Kippur War and the Iranian Revolution. Accordingly, the Fed has revised up its US economic growth forecasts, projecting GDP growth of 2.4% and 2.3% in 2026 and 2027, respectively, up from previous estimates of 2.3% and 2.0%. Meanwhile, the unemployment rate this year is projected to remain at 4.4%, which is low as compared with the average of around 6.3% during the 1970s.
• Jerome Powell stated that he will not resign from the Fed's Board of Governors until the US Department of Justice (DOJ) completes its investigation into the building renovation project. He also noted that, if the appointment of a new Fed Chair is not completed before his term ends in May 2026, he is willing to continue serving as chair pro tem.
• Financial markets shifted into a risk-off mode after the FOMC meeting signaled the possibility of interest rates remaining higher for longer, combined with an attack on Iran's largest gas production facility, which pushed global crude oil prices up to USD108 per barrel.

• Major US stock indices (Dow Jones, S&P 500, and Nasdaq) declined by an average of 1.4%–1.6%.
• The 10-year US treasury yields surged above 4.27%.
• The US dollar index (DXY) strengthened above the 100 level again, while the Thai Baht continued to depreciate to around THB32.80/USD.
• Global gold prices fell below USD​4,900 per ounce.

        KResearch assesses that the Fed will remain in a wait-and-see mode, holding off on policy adjustments while closely monitoring developments in the Iran war, which could affect energy prices, inflation, and the US economy. Two main scenarios can be outlined as follows:

• Base case: If tensions do not escalate, inflation remains contained, and the US economy slows, the Fed is likely to lower the policy rate once in the second half of the year, as indicated in the Dot Plot. 

• Worst-case scenario: If the conflict persists and pushes inflation materially above target, the Fed may hold rates unchanged throughout the year and may postpone rate cuts until 2027.