FOMC Recap: Less Dovish Powell Pushes Dollar Back Toward 10-Month Highs
Author: Matt Weller CFA, CMT, Head of Market Research
Date: March 18, 2026
Key Points
- The Federal Reserve’s FOMC kept interest rates unchanged in the 3.50-3.75% range, as expected, in an 11-1 vote.
- The dot plot indicates a more gradual, shallower rate cut path, rather than a fundamental change in the Fed's view.
- The US Dollar Index (DXY) is trading near the 100.00 level as traders adjust their expectations for interest rate cuts.
FOMC Interest Rate Decision
The Federal Reserve’s FOMC decided to maintain interest rates in the 3.50-3.75% range, with a notable dissent from Stephen Miran, the only member voting against the decision. No other changes to monetary policy were made during this meeting.
FOMC Monetary Policy Statement
The accompanying monetary policy statement did not include significant changes. It noted that the unemployment rate has “been little changed in recent months” and acknowledged the “uncertain” economic implications stemming from developments in the Middle East.
Summary of Economic Projections and Dot Plot
The FOMC released updated quarterly economic forecasts, with the most significant change being the inflation projection, now at 2.7% for this year, with a slight decrease to 2.2% in 2027. The real GDP growth forecast was adjusted to 2.4%, while the unemployment rate remains projected at 4.4% for this year and slightly up to 4.3% for the next year.
The dot plot showed no changes in the median expectation of one interest rate cut in 2026 and another in 2027, but there was a convergence among members towards fewer cuts, indicating a more cautious approach.
FOMC Chairman Jerome Powell’s Press Conference
During the press conference, Chairman Jerome Powell appeared less dovish, emphasizing the uncertainty surrounding economic forecasts and the timing of future interest rate changes. Key highlights from his comments included:
- Attention to risks on both sides of the Fed's mandate.
- Recent inflation expectations have risen due to Middle Eastern developments.
- Past rate cuts are expected to stabilize the labor market.
- Future rate cuts are contingent on seeing progress in inflation.
- Concerns about the impact of energy prices on overall inflation.
Market Reaction
Following the FOMC meeting, traders adjusted their expectations for immediate interest rate cuts, leading to an increase in the 2-year Treasury yield. The US Dollar Index (DXY) rose, approaching the 100.00 level, driven by reduced odds of rate cuts and a safe-haven demand due to escalating conflicts in the Middle East. The key level to watch is the 10-month high at 100.50, with a potential breakout indicating further gains above 101.00.
Written by: Matt Weller, Global Head of Research