FOMC still expects to cut once this year: FOMC Post-Meeting Comment March 2026

As expected, and bang in line with market pricing, the FOMC maintained the target range for the fed funds rate between 3.50% - 3.75% at the conclusion of the March meeting, extending a ‘pause’ in the easing cycle which began in January, amid an increasingly uncertain economic outlook in light of ongoing conflict in the Middle East, and the subsequent sharp ...

At its meeting ending on 18 March 2026, the Monetary Policy Committee (MPC) voted unanimously to maintain Bank Rate at 3.75%. Conflict in the Middle East has caused a significant increase in global energy and other commodity prices, which will affect households’ fuel and utility prices and have indirect effects via businesses’ costs. Prior to this, there had been continued disinflation in domestic prices and wages. CPI inflation will be higher in the near term as a result of the new shock to the economy. Monetary policy cannot influence global energy prices but aims to ensure that the economic adjustment to them occurs in a way that achieves the 2% target sustainably. The MPC is alert to the increased risk of domestic inflationary pressures through second-round effects in wage and price-setting, the risk of which will be greater the longer higher energy prices persist. The MPC is also assessing the implications for inflation of the weakening in economic activity that is likely to result from higher energy costs. *BANK OF ENGLAND HOLDS KEY INTEREST RATE AT 3.75% IN 9-0 VOTE *BOE SAYS ALL MEMBERS 'STAND READY TO ACT' TO CONTAIN INFLATION *BOE SEES INFLATION AT OVER 3% IN FEBRUARY, NEAR 3.5% IN MARCH Bank of England votes unanimously to keep rates on hold as Iran war clouds outlook The Bank of England’s Monetary Policy Committee has voted “unanimously” keep its benchmark interest rate on hold at 3.75% on Thursday. Before the war in Iran erupted in late February, the BOE had been expected to cut its key interest rate, known as ‘Bank Rate,’ at its March meeting, but the conflict has sent global energy prices soaring, clouding the outlook for inflation and growth. “Conflict in the Middle East has caused a significant increase in global energy and other commodity prices, which will affect households’ fuel and utility prices and have indirect effects via businesses’ costs,” the BOE said in a statement.

Escalation of conflict in the Middle East has sparked a sharp increase in volatility in global financial markets, following a period of benign market conditions. Volatility has been particularly pronounced in energy and other commodity markets, and this has spilled over to other asset classes. Just prior to the escalation of the conflict, some firms had experienced sharp equity price declines as investors reassessed the prospects for AI to affect business models. Conditions for private credit markets had also become more challenging. Yet risk premia in global equity and credit markets have remained fairly low by historical standards. Additionally, even after an increase in government bond yields in several advanced economies, measures of sovereign bond term premia were well within historical ranges and markets remained functional. Resilience in the global financial system prior to the escalation of the conflict had been supported by systemically important banks remaining profitable and well capitalised, and growth in the global economy over the past year exceeding most analyst expectations, with trade flows adjusting relatively quickly to changes in tariffs. Corporate and household balance sheets in advanced economies have remained strong, although pockets of stress persist among non-prime borrowers. Reserve Bank of Australia observes that the likelihood of a major negative shock to Australia’s financial system has risen recently. RESERVE BANK OF AUSTRALIA CAUTIONS THAT THE MIDDLE EAST CONFLICT MAY TRIGGER A SIGNIFICANT INTERNATIONAL FINANCIAL DISRUPTION. ... Reserve Bank of Australia states that Australian banks are equipped to handle loan losses even during a severe economic downturn. RESERVE BANK OF AUSTRALIA INDICATES THAT HOUSEHOLDS AND BUSINESSES ARE GENERALLY IN SOLID FINANCIAL SHAPE AND UNLIKELY TO DESTABILIZE THE SYSTEM. ...