FOMC Meeting Preview: So Much for 2% Inflation this Year?
By Matt Weller CFA, CMT, Head of Market Research
Date: March 17, 2026
Key Points
- The Federal Reserve is expected to maintain interest rates in the 3.50-3.75% range.
- Revisions to the Fed's economic projections may indicate a shift towards a stagflationary economy.
- Market focus will be on the Fed's Monetary Policy Statement and Chairman Powell's press conference.
FOMC Meeting Expectations
The upcoming FOMC meeting on March 18, 2026, is anticipated to conclude with no changes to interest rates, as traders and economists are pricing in a 99% probability of maintaining the current rate. The Fed's Summary of Economic Projections may see upward revisions in unemployment and Core PCE inflation forecasts due to the ongoing conflict in Iran.
Impact of the Iran Conflict
The war in Iran is exerting pressure on the Fed's dual mandate by increasing energy costs, which could lead to higher inflation, while simultaneously impacting the labor market negatively. This situation complicates the Fed's decision-making process, making it likely that they will choose to keep policies unchanged for the time being.
Market Reactions
Traders are particularly interested in the quarterly Summary of Economic Projections, where the Fed may maintain its forecast for one interest rate cut this year, although there is a possibility of no cuts being projected. The adjustments in forecasts could indicate a movement towards a stagflationary scenario, which is a concern for central bankers.
Technical Analysis: GBP/USD
As the FOMC meeting approaches, GBP/USD is showing a downward trend. The pair has been declining since late January, and unless Powell expresses significant concerns about the economy, traders may look to sell GBP/USD, targeting a support level at 1.3200. A dovish outlook from the Fed could lead to a breakout above resistance levels.