US Federal Reserve Maintains Interest Rates at 3.5%-3.75% for Second Consecutive Meeting

US Federal Reserve Maintains Key Interest Rate Steady for Second Consecutive Time

March 18, 2026

The US Federal Reserve announced its second monetary policy decision for 2026, keeping its benchmark interest rate steady at a range between 3.50% and 3.75%. In a 11-1 vote, the Federal Open Market Committee (FOMC) maintained the status quo, despite ongoing tensions in the Middle East driving energy prices to multi-year highs.

Key Interest Rate Range: 3.50% - 3.75%

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

The decision to keep rates steady was widely expected, given the uncertain economic outlook driven by the Middle East conflict. The Fed's preferred inflation gauge (PCE) is now projected to reach 2.7% by the end of 2026, up from its previous forecast of 2.5%. Prior to the conflict, inflation had remained above the Fed's target at 2.4%.

Inflation Projections:

• 2.7% (PCE) by the end of 2026
• 2.1% by 2027

Policymakers expect the US-Israel conflict with Iran to push inflation higher this year, but anticipate price pressures to ease gradually. The Fed officials had reduced short-term interest rates three consecutive times before pausing them in January. The central bank operates under a dual mandate of keeping inflation near its long-term 2% target while ensuring maximum employment.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Monetary Policy Outlook:

The Fed expects to cut its key rate once in 2026, as it balances economic growth with inflation control. Economic activity has been expanding at a solid pace, job gains have remained low, and inflation remains somewhat elevated.