18 March 2026
If you are covering the latest Federal Reserve interest rate decision, please see the following comment from Lindsay James, investment strategist at Quilter:
“Following a run of disappointing data prints, the Federal Reserve has once again opted to hold interest rates at today’s meeting, and its latest dot plot still points to just one rate cut this year. The US economy shed 92,000 jobs in February when markets had expected a gain of around 55,000, and while adverse weather and strike action played a part, the pain was felt across a range of industries. We also saw Q4 GDP revised down sharply, with growth now estimated at just 0.7% rather than the initial 1.4%. However, the economic projections that accompanied this statement highlighted that the Committee has increased its expectations for GDP growth in each of the next three years.
“Ordinarily, this combination of softer growth and a weakening labour market would tilt the balance towards a rate cut given the Fed’s dual mandate requires it to consider both price stability and maximum employment. However, the surge in oil prices has been the fly in the ointment.
“Central banks typically look through short term oil price volatility as while it can lead to higher prices for some goods and services, it also tends to act as its own brake on the economy, dampening the inflationary impact. This time, however, the closure of the Strait of Hormuz, the scale of the resulting price shock, and the uncertainty over when supply routes will fully reopen mean the Fed cannot afford to dismiss the inflationary risk so easily.
“Just one of the Trump appointed Committee members, Stephen Miran, continued to vote for an immediate cut, while the remaining voters told a more cautionary tale. Attention will soon shift to the possible arrival of Kevin Warsh later in the spring. He is set to inherit a committee that has been deeply split between hawks and doves, and it is unlikely that he’ll be a unifying figure given he’ll have argued for cuts in order to be appointed in the first place. There is a real possibility that later in the year we could see the unusual situation of an incoming Chair voting for a cut that does not receive majority support.”
