The Federal Reserve is still expecting to cut interest rates once this year in spite of a spike in oil prices from the Iran war.
The central bank’s so-called dot plot, which shows the anonymous expectations of the 19 individual members, showed a median estimate of 3.4% for the federal funds rate at the end of 2026, the same as what it had projected at the end of last year.
However, a closer look at the overall dot plot showed the balance of projections moved toward fewer reductions, meaning more members are forecasting one reduction from two previously.
“If you notice, the median didn’t change, but there was actually some movement toward — a meaningful amount of movement — toward fewer cuts by people,” Fed Chair Jerome Powell said in his post-meeting remarks. “So four or five people went from two to one, let’s say, two cuts to one cut.”
The Fed kept rates unchanged on Wednesday, voting 11-1 to keep the benchmark federal funds rate anchored in a range between 3.5%-3.75%.
