Federal Reserve Chair Jerome Powell departs after speaking during a press conference following the Federal Open Markets Committee meeting at the Federal Reserve in Washington, DC, on March 18, 2026. ANNA MONEYMAKER / AFP
The US Federal Reserve raised its inflation forecast on Wednesday, March 18, as it held interest rates steady, citing an "uncertain" economic outlook due to the war in Iran. The 11-1 vote on the benchmark lending rate was widely expected, but nonetheless defied US President Donald Trump's demands for a reduction as the world's largest economy battles stubborn inflation and weak labor demand.
Rates were kept steady at a range of 3.5% to 3.75%, with officials flagging one expected cut by the end of the year. But the Fed raised its inflation outlook, now expecting its preferred personal consumption expenditures (PCE) measure to stand at 2.7% by December 2026, up from an earlier estimate of 2.4%.
"In the near term, higher energy prices will push up overall inflation," Fed Chair Jerome Powell said, referring to steeper costs from the war in the Middle East. "But it is too soon to know the scope and duration of the potential effects on the economy," he told a press briefing after the Fed's policy meeting.
