Fed officials still foresee rate cut this year, despite war impacts, minutes show

• The FOMC voted 11-1 to hold rates steady at 3.5%-3.75%, with consensus still projecting one rate cut in 2026, unchanged from December
• Officials expressed concern that rising oil prices from Middle East hostilities could reduce household purchasing power and warrant additional rate cuts if labor market conditions deteriorate further
• Economic growth has slowed significantly, with GDP rising just 0.7% in Q4 2025 and tracking at 1.3% for Q1 2026, raising recession concerns on Wall Street

Summary: Federal Reserve March Meeting Minutes

Key Decisions and Outlook

The Federal Reserve held interest rates steady at 3.5%-3.75% at its March 17-18, 2026 meeting, with an 11-1 vote. Despite ongoing uncertainty from the Iran war and tariffs, most officials still anticipate one rate cut in 2026, unchanged from December projections.

Major Factors Under Consideration

Geopolitical Risks: The U.S.-Israel attack on Iran triggered energy price spikes and inflation concerns. Officials acknowledged it was "too early" to assess full economic impacts and emphasized the need to remain "nimble." A cease-fire announced Tuesday led to sharp oil price declines, though durability remains uncertain.

Inflation: Policymakers expect inflation to continue moving toward the Fed's 2% target. While tariffs pose risks, most view their inflationary impact as temporary. However, sustained Middle East hostilities could necessitate rate hikes if inflation persists.

Labor Market Concerns: The "vast majority" of participants identified downside risks to employment. Job creation has been nearly flat over the past year, with growth concentrated almost exclusively in healthcare sectors. Officials warned that "low rates of net job creation" leave labor markets vulnerable to adverse shocks. Higher oil prices could reduce household purchasing power and soften labor conditions, potentially warranting additional cuts.

Economic Growth

GDP growth has slowed significantly, rising just 0.7% in Q4 2025 and tracking 1.3% for Q1 2026. This deceleration has prompted some Wall Street analysts to raise recession expectations.

Market Implications

Markets expect the Fed to remain on hold through 2026, though the recent cease-fire has increased odds for a potential cut. Chair Powell cautioned that premature rate hikes could have negative longer-term effects.