WASHINGTON, D.C. — The Federal Reserve held its interest rates steady at 3.50% to 3.75% on March 18, 2026. Federal Reserve policymakers released a Summary of Economic Projections showing they expect one benchmark interest rate cut in 2026 and another in 2027.

The only official to vote against keeping interest rates unchanged was Stephen Miran, who sought a 0.25% rate cut. Federal Open Market Committee officials project core inflation to be 2.7% by the end of 2026, up from their December forecast, and U.S. gross domestic product growth of 2.4% for 2026, an increase of 0.1 percentage point from their previous projection.

On February 28, 2026, the United States and Israel attacked Iran. The Islamic Republic of Iran responded by blockading the Strait of Hormuz, a transit route for oil from the Middle East. U.S. crude oil prices rose by more than 40% since the beginning of the U.S.-Israeli war with Iran. The average retail price of unleaded gasoline in the United States increased by more than 75 cents per gallon since the war began.

Federal Reserve Chair Jerome Powell said "Near-term measures of inflation expectations have risen in recent weeks, likely reflecting the substantial rise in oil prices caused by the supply disruptions in the Middle East." He added, "Higher energy prices will push up overall inflation, but it is too soon to know the scope and duration of the potential effects on the economy."

Powell emphasized uncertainty about economic projections. "The thing I really want to emphasize is that nobody knows," he said. "If we were ever going to skip [a Summary of Economic Projections], this would be a good one, because we just don't know."

U.S. nonfarm payroll employment decreased by 92,000 jobs in February 2026. The February 2026 jobs report included downward revisions to the jobs figures for January and December. The inflation rate was 2.4% in January and 2.4% in February 2026, after falling from 3.0% in September 2025.

Powell tied future rate cuts to inflation progress. "If we don't see that progress, then you won't see the rate cut," he said. "We're well aware of the performance of inflation over the last few years, and how a series of shocks have interrupted progress that we've made over time."