OAN Staff Katherine Mosack
6:23 PM – Wednesday, March 18, 2026
Federal Reserve Chair Jerome Powell announced on Wednesday that interest rates will remain unchanged for the second consecutive meeting, as the central bank weighs the risks of the ongoing conflict in Iran. Following a series of three rate cuts in late 2025, the Fed maintained its benchmark range of 3.5%–3.75%.
While the latest Summary of Economic Projections still signals one rate cut for 2026, officials suggested any easing is unlikely until later in the year.
“The rate forecast is conditional on the performance of the economy, so if we don’t see that progress then you won’t see the rate cut,” he said.
For years, policymakers have struggled to anchor inflation against a backdrop of volatile energy costs. This battle faced a fresh setback as escalating conflict in the Middle East effectively shuttered the Strait of Hormuz, a chokepoint responsible for roughly 20% of the world’s daily oil supply, sending gasoline prices surging.
“Uncertainty about the economic outlook remains elevated,” the Fed said in a statement. “The implications of developments in the Middle East for the U.S. economy are uncertain.”
On Wednesday, the Federal Reserve also updated its quarterly projections, forecasting that inflation will reach 2.7% by year-end — a slight upward revision from previous estimates.
While the central bank views the recent spike in gas prices as a transitory pressure, officials acknowledged that the economic outlook remains tethered to Middle East volatility. Despite these headwinds, the Fed stated that it remains committed to its long-term goals, projecting inflation to cool to 2.2% in 2027 before finally hitting its 2% target in 2028.
During his post-announcement press conference, Powell maintained a notably optimistic tone. He highlighted the economy’s underlying resilience, noting that the U.S. has successfully navigated tariff chaos, a global pandemic, and the rate hikes of 2022–2023 — all while managing to avoid a recession.
“The U.S. economy has been doing really well through a lot of challenges,” Powell said. “It’s been amazing to see.”
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