Catenaa, Wednesday, March 18, 2026- US Federal Reserve left interest rates unchanged on Wednesday and continued to expect one rate cut this year as uncertainty rises due to the war in the Middle East.

“The implications of developments in the Middle East for the US economy are uncertain,” officials said in a post-meeting statement. “The committee is attentive to the risks to both sides of its dual mandate.”

The Federal Open Market Committee voted 11-1 to hold the benchmark federal funds rate in a range of 3.5% to 3.75%. Governor Stephen Miran dissented, calling for a quarter-point reduction.

This marks the second straight time officials held rates in place, though the economic backdrop has changed significantly since their last meeting.

In January, policymakers signaled growing confidence that the unemployment rate was stabilizing. Soon after, several officials sounded intent on holding rates for an extended period to help nudge inflation lower.

Then came a weak February employment report that cast fresh doubt on the steadiness of the labor market.

Officials dropped language from their January statement describing the labor market as showing signs of stabilization. In its place, they said the unemployment rate was “little changed in recent months.”

In a fresh set of rate projections, officials continued to expect one quarter-point rate cut in 2026 and one in 2027. No policymakers indicated a preference to raise rates this year.

In their updated economic forecasts, policymakers slightly upgraded their outlook for growth in 2026 to 2.4%, from the 2.3% they forecast in December. Their unemployment forecast remained unchanged at 4.4% for the end of 2026.

Officials also raised their outlook for 2026 inflation to 2.7% from 2.4%. Notably, they saw the core measure – which excludes volatile food and energy categories – also rising to 2.7%.